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SEARS CANADA DEFINED BENEFIT PENSION PLAN SHORTFALL: MP SCOTT DUVALL COMES THROUGH ON HIS PROMISE IN CANADIAN PARLIAMENT

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Sears Canada defined benefit pension plan shortfall: Introduction

On November 6, 2017, Hamilton Mountain NDP MP Scott Duvall rose in the House of Commons for leave to introduce Bill C-384. It is titled “An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance programs)”. Mr. Duvall’s motivation was the Sears Canada defined benefit pension plan shortfall.

Sears Canada defined benefit pension plan shortfall: Hamilton Mountain MP Scott Duvall introduces Private Member’s Bill C-384

Here is what Mr. Duvall said:

“Mr. Speaker, I would like to take this time to thank my seconder, my colleague who has done great work and works very hard in this House, and who has also helped me a lot on this bill.

I rise today to introduce a private member’s bill titled, an act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act. This bill will amend the Bankruptcy and Insolvency Act and the CCAA so that companies will have to bring any pension plan fund to 100% before paying any other secured creditors. It also makes amendments to require companies to pay any termination or severance pay owing before paying any secured creditors.

Other amendments will prevent a company from stopping the payment of any post-retirement benefits during any proceedings under the BIA or CCAA. These amendments will inject some fairness into a process that often sees the interests of workers, retirees, and their families placed behind all others.

We must fix the imbalances in current legislation and provide Canadian workers, retirees, and their families with the protection they expect and deserve. I am hopeful that all my colleagues in Parliament will put aside their partisan differences and support this bill. Canadian workers, retirees, and their families deserve no less.”

Although he did not mention it specifically by name in the House of Commons, Mr. Duvall has said that he would introduce such a Bill as a result of the Sears Canada defined benefit pension plan shortfall.

Sears Canada defined benefit pension plan shortfall: Hamilton Mountain MP Scott Duvall walks the walk

In our September 27, 2017 blog, TORONTO BUSINESS BANKRUPTCY PROTECTION: NDP WANTS FEDERAL INSOLVENCY LAWS CHANGED SO THERE IS PENSION PLAN SECURITY WHEN FINANCIALLY TROUBLED BUSINESSES FAIL, we told you that Hamilton Mountain MP Scott Duvall, the NDP pension plan critic, informed a group at the United Steelworkers’ Hall that he will present a private member’s bill to secure employees’ pension plans and benefits, and pressure business to offer termination or severance pay, prior to paying secured lenders.

With his Bill C-384, Mr. Duvall has lived up to his promise.

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Sears Canada defined benefit pension plan shortfall: This is actually the second Bill attempting deal with this problem

In our November 1, 2017 blog, SEARS CANADA CLOSING: POLITICIANS WANT NEW LAWS TO PROTECT PENSIONERS DUE TO SEARS CANADA CLOSING, we reported that Bloc Québécois MP Marilène Gill’s Private Member’s Bill C-372, passed First Reading. That Bill is titled “An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans)”. In that blog, we described the provisions included in that Bill.

Like Mr. Duvall, Ms. Gill is trying to pass legislation to avoid another Sears Canada defined benefit pension plan shortfall insolvency situation.

Sears Canada defined benefit pension plan shortfall: What does Bill C-384 actually say

The purpose of this blog, is to describe the terms of Mr. Duvall’s Bill.

Mr. Duvall’s Private Member’s Bill C-384 passed First Reading. It is very similar to Ms. Gill’s BIll C-372. He wishes to amend the Bankruptcy and Insolvency Act (BIA) as follows:

  • In order to be approved by the Court, a corporate restructuring proposal under the BIA, for a company with a prescribed pension plan, the Proposal must include payment in full of any unfunded pension liability or solvency deficiency. The amount is calculated at the time of the filing of the Notice of Intention To Make A Proposal (NOI) or the Proposal if there is no NOI filed.
  • New section 69. 7 be added to the BIA that in the restructuring proposal of an employer, upon filing, until the discharge of the Licensed Insolvency Trustee (LIT), or the insolvent employer becomes bankrupt, all amounts that the employer must contribute under any arrangement for the benefit of the employees, must continue throughout the restructuring period. This would cover any pension plan, health, injury or accident plans and group insurance coverage.
  • The unfunded pension liability or solvency deficiency calculation is called “special payments” in Bill C-384. The calculation is by section 9 of the Pension Benefits Standards Regulations, 1985.
  • In a receivership, the receiver is personally liable for paying any unfunded pension liability or solvency deficiency. However, the receiver’s liability is only from the proceeds of the sale of current assets.
  • In either a receivership or corporate bankruptcy, the charge for any unfunded pension liability or solvency deficiency would rank ahead of the charge of any other secured creditor. It is interesting to note that the Bill does not attempt to provide such a security ranking to anything other than the pension liability or solvency deficiency.
  • The Officers and Directors of the company are not entitled to the benefit of this secured charge. Even if they are participants in the pension plan that has the unfunded pension liability or solvency deficiency.
  • New subsection 136(1) (d. 001) to the BIA, creating an extra class of preferred creditor. A preferred creditor is an unsecured creditor who ranks ahead of the ordinary unsecured creditors and ranks after the secured creditors. The Bill states that it would say that the amount of any termination or severance pay owed to an employee by a bankrupt employer, less any amount previously paid by the LIT, would rank in priority right after the wages owed to the employee.
  • There are also proposed amendments to the Companies’ Creditors Arrangement Act (CCAA) in Bill C-384. It is to bring the same changes in that statute as those to the BIA described above. The intent is that the treatment under both statutes is the same.

Sears Canada defined benefit pension plan shortfall: Now it is up to Justin Trudeau and his Liberal Party

We will now have to wait and see what happens to both Ms. Gill’s and Mr. Duvall’s Private Member’s Bills. As we previously reported, it is unusual that a Private Member’s Bill becomes real legislation. As the Liberals hold a majority in Parliament, if they don’t want it, or a revised Bill for the same purpose, to pass, it won’t.

Sears Canada defined benefit pension plan shortfall: Does your company need a restructuring and turnaround plan?

Is your company insolvent and needs to restructure? Is your business viable but can only employ people and carry on business if it can restructure its debt? Contact the Ira Smith Trustee & Receiver Team. If we meet with you early on, we can create a restructuring and turnaround strategy. That way your company won’t have to be like Sears Canada closing.

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CREDIT CARD DEBT PROBLEMS: ARE YOUR LOYALTY REWARDS CREDIT CARDS GETTING YOU INTO DEBT?

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Credit card debt problems: Introduction

Canadians obsess over loyalty programs, which contributes to credit card debt problems. The only way to get more points and rewards, is to keep buying things with the loyalty program credit card.

It’s no surprise since we’re constantly bombarded with advertisements telling us that we can get FREE trips, movies, discounts, merchandise; who could resist such tempting offers? From airlines to fast food chains, it seems that new loyalty programs are cropping up faster than weeds in your garden.

Credit card debt problems: Would you like 10% off your purchase today?

How many times have you gone to make a cash or debit purchase and be told, “If you sign up for our credit card today, we’ll take 10% off your purchase”? Pretty soon you’ll be signed up to a stack of loyalty credit cards trying to accumulate enough points for all of those wonderful things that you’re planning to get free.

Credit card debt problems: How obsessed are Canadians with loyalty credit cards?

  • There are 130 million loyalty memberships in Canada. This averages out to more than four memberships per person (2015 study from Colloquy Loyalty Census Canada).
  • Canadians are currently hoarding $16 billion worth of points. This is an average of $629 per person (Bond Brand Loyalty).
  • The number of loyalty memberships per Canadian has grown 25% since 2013 (Bond Brand Loyalty).

Credit card debt problems: Here are our top 3 risks associated with loyalty credit cards

  1. The more credit cards you apply for the worse your credit score can become. Every time you apply for credit the lender requests a credit score. Each inquiry places a record on your credit report. Too many inquiries is often associated with higher rates of default.
  2. You may get sucked into the cycle of buying things because of the amount of points you’ll get. Have a good look at your credit card statement and be honest about how many items you bought because of the points.
  3. Are you paying your balance in full every month? If not, the high interest you’re paying will more than wipe out any benefit you’re getting. These discounts may be costing you a lot of money and the free stuff could actually be quite expensive.

Credit card debt problems: Are you caught in the loyalty credit card trap?

Is your obsession with accumulating points getting you into credit card debt problems? If so, you need professional help and you need it now. Contact the Ira Smith Team. We can help you get out of credit card debt problems, or any other kind of debt problem. We will put you back on track to debt and stress free living Starting Over, Starting Now. Book an appointment for a free, no obligation consultation today and take the first step to ending the cycle of debt.

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SEARS CANADA CLOSING: POLITICIANS WANT NEW LAWS TO PROTECT PENSIONERS DUE TO SEARS CANADA CLOSING

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Sears Canada Closing: Introduction

Following the Sears Canada failed restructuring, is the Sears Canada closing of all stores. It is leaving 16,000 retirees unclear about the future of their underfunded pension plan. Support is expanding for brand-new laws to better protect Canadian workers during a company’s collapse.

Sears Canada Closing: What CARP has to say

CARP, a nationwide not-for-profit group formerly called the Canadian Association for Retired Persons, was recently on Parliament Hill to meet dozens of MPs as it lobbies for law adjustments.

Wanda Morris, vice-president of CARP, stated that CARP is requesting for the unfunded pension liability be provided priority position so it goes to the front of the line.

Pensioners hold no priority when it pertains to dividing up assets through a bankruptcy, and Ms. Morris wants protection for retirees for underfunded defined benefit pensions when the company goes through a restructuring or into bankruptcy.

Ms. Morris stated that along with the practically 16,000 retirees at Sears, CARP estimates that there are about 1.3 million workers in Canada that possibly could be in danger with defined advantage pension. Sears Canada closing all stores has made the plight of retirees a front and centre issue for CARP.

Sears Canada Closing: Private Member’s Bill C-372 passes First Reading

On Oct. 17, Bloc Québécois MP Marilène Gill suggested a member’s bill, C-372. The intent is to change the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.

The change attempts to correct the injustice dealt with by retired workers whose pension as well as group insurance policy benefits are not secured when their company declares bankruptcy or undergoes restructuring. The changes are a result of the Sears Canada employees and retirees treatment, as a result of Sears Canada closing locations.

Sears Canada Closing: What the NDP has to say

Hamilton Mountain MP Scott Duvall plans to introduce his very own private member’s bill to try to solve this problem. While he notes he has actually had talks with Gill, he claimed his suggestion will be a bit different.

Mr. Duvall specifies that his bill will amend the regulations from where it’s worded currently. He wishes that when a company goes into bankruptcy protection, the pensioners will be a secured creditor. He is also responding to the process which has led to Sears Canada closing store locations,

Sears Canada Closing: Bloc MP Marilène Gill and her Bill C-372

On October 17, 2017, MP Marilène Gill rose in Parliament and stated:

“Mr. Speaker, I have the honour to introduce my first bill in the House today, a private member’s bill that seeks to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act.

This bill seeks to correct the injustice faced by retired workers whose pension plans and group insurance plans are not protected when their company goes bankrupt or undergoes restructuring.

I will do everything in my power to ensure that this bill receives royal assent, that way, we can help prevent retirees, like those from my riding who are here today to support me, from losing their pensions, and improve the existing legislation by giving pension plans’ unfunded liabilities preferred creditor status, among other things. I hope my colleagues will be supporting this bill.”

Sears Canada Closing: Can it get Royal Assent?

BILL C-372 which passed First Reading on October 17, 2017 is named “An Act to amend the Bankruptcy and Insolvency Act and the Companies’ Creditors Arrangement Act (pension plans and group insurance plans)”.

Private member’s bills such as this one rarely pass the House. However, I thought it would be useful to describe what Ms. Gill’s views are as a result of Sears Canada closing.

Below is my analysis of how BILL C-372 proposes to amend the Bankruptcy and Insolvency Act (Canada) (BIA) and the Companies’ Creditors Arrangement Act (Canada) (CCAA). The impetus of course is certain high-profile corporate restructurings/failures with underfunded defined benefit pension plans. With Sears Canada closing, Ms. Gill put forward her private member’s bill.

The most recent corporate failure which initiated her private member’s bill of course was a result of Sears Canada closing.

Sears Canada Closing: Bill C-372 proposed BIA and CCAA amendments

Bill C-372 wishes to amend the BIA as follows:

  • In order to be approved by the Court, a corporate restructuring proposal under the BIA, for a company with a prescribed pension plan, the Proposal must include payment in full of any unfunded pension liability or solvency deficiency calculated at the time of the filing of the Notice of Intention To Make A Proposal (NOI) or the Proposal if there is no NOI filed.
  • The unfunded pension liability or solvency deficiency calculation is by section 9 of the Pension Benefits Standards Regulations, 1985.
  • In a receivership, the receiver is personally liable for paying any unfunded pension liability or solvency deficiency but only from the proceeds of the sale of current assets.
  • In either a receivership or corporate bankruptcy, the charge for any unfunded pension liability or solvency deficiency would rank ahead of the charge of any other secured creditor.
  • The Officers and Directors of the company are not entitled to the benefit of this secured charge. Even if they are participants in the pension plan that has the unfunded pension liability or solvency deficiency.
  • In a corporate restructuring proposal or bankruptcy, the amount not paid under the Wage Earner Protection Program Act (Canada) (WEPPA). It is the amount to adequately indemnify the beneficiaries in the event the employer ceases to take part in a group insurance plan. Such a plan is one that provides for the payment of benefits to, or in respect of, employees or former employees for, among other things, life, disability, health or dental insurance is a preferred claim. It will be a preferred, but still an unsecured claim.
  • The amount equal to the difference between any severance pay or compensation in lieu of notice owed by an employer to an employee and any amount previously paid by the trustee for that severance pay or compensation in lieu of notice.

There are also proposed amendments to the CCAA in Bill C-372. It is to bring the same changes in that statute as described above. The intent is that the treatment under both statutes is the same. I won’t repeat those again.

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Sears Canada Closing: Will Bill C-372 become law?

As I stated above, it is very rare that a private member’s bill becomes real legislation. The other reason is that the Liberals hold a majority in Parliament. If they don’t want it to pass, it won’t.

On October 25, 2017, Innovation Minister Navdeep Bains said the Liberal government has no plans to change laws to protect pensioners in the wake of Sears’ bankruptcy. That is a pretty definitive statement.

So right now it seems there is a lack of political will to make the proposed law amendments. I suspect that on a financial basis, there will also be opposition for the following reasons:

  • In most cases, it will be impossible to have a successful large corporate restructuring if 100% of unfunded pension liability must be paid. Therefore, jobs will not be saved if we have more corporate bankruptcy filings instead of restructurings.
  • Lenders will have to now ignore current assets in the borrowing base of corporations. This will make corporate borrowing much more difficult for solvent corporations with pension plans to carry on business.
  • Lenders may have to reserve the entire amount of any unfunded amounts. They will rank ahead in a receivership or bankruptcy.
  • Severance pay or compensation in lieu of notice will now be a claim ranking ahead of trade suppliers in a corporate restructuring or corporate bankruptcy. This may alter the amount of an unsecured credit line a supplier will be willing to give to a customer.
  • It will cause more chaos to normal lending and trade practices which will be a problem for any government.
  • Claims under the group health indemnity provisions may not result in any real benefit to employees of a company going through either a corporate restructuring or bankruptcy. There is rarely funds left over after the claims of secured creditors.

We will keep monitoring this important issue. We will update you when MP Scott Duvall puts forward his private member’s bill and as other matters arise.

Sears Canada Closing: What To Do If You Or Your Company Need A Financial Restructuring?

It is now Sears Canada closing time. If you’re attempting to discover a means to restructure your firm’s debt, so that you can avoid a Sears Canada closing scenario, call Ira Smith Trustee & Receiver Inc. If we meet with you early on, we can create a restructuring and turnaround strategy. That way your company won’t have to be like Sears Canada closing.

Our strategy for every person is to create a result where Starting Over, Starting Now occurs, starting the minute you walk in the door. You’re simply one telephone call away from taking the crucial steps to go back to leading a healthy, balanced and tension free life.

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CANADA MIDDLE CLASS SIZE: DO YOU FALL INTO THE TRUDEAU MIDDLE CLASS DEFINITION?

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Canada middle class size: Introduction

Most Canadians think of themselves as being “middle class”; however that seems to be changing. According to an Ekos-Canadian Press poll, Canadians who self-identify as working class poor are on the rise. The increase seems to be at the expense of the Canada middle class size. This same poll suggests people are feeling more pessimistic about their own futures not just over the next year, but over the next five.

Canada middle class size: The old Canada middle class definition

We used to define middle class as the median in household net worth, but this too, has changed. Middle class has now morphed into more of a state of mind than a demographic bracket. We now tend to think of middle class as a lifestyle and a value system – hence the expression “middle class values”.

This belief in middle class being a lifestyle is contributing to an increasing debt load for many Canadians. According to a recent CIBC poll:

  • Many Canadians seems uninterested in prioritizing needs over wants
  • Only 50% of those surveyed were willing to cut spending on non-essential items to keep up with bills

Canada middle class size: Canadian average household debt

The sad truth is that regardless of whether you’re middle class as a demographic bracket or a lifestyle, Canadians are now carrying more debt than those of any other G7 nation. Many are spending as much or more than they earn and as a result spreading things so thin that they’re living paycheque to paycheque.

In a recent survey by Canadian Payroll Association, almost 48% of respondents admitted they wouldn’t be able to make ends meet if their paycheques were late even by a week.

Canada middle class size: Is your debt pushing you away from the middle class

Are you getting deeper in debt trying to maintain your middle class lifestyle? If so, you need professional help before your house of cards comes tumbling down. I strongly recommend that you contact a professional trustee as soon as possible. Ira Smith Trustee & Receiver Inc. can help, no matter how dire your situation seems. With immediate action and the right plan, we can solve your financial problems Starting Over, Starting Now. Give us a call today.

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POOR CREDIT PERSONAL LOANS GUARANTEED APPROVAL CANADA: REDUCE AND DON’T INCREASE DEBT TO IMPROVE YOUR CREDIT SCORE

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Poor credit personal loans guaranteed approval Canada: Introduction

Legit companies do not give poor credit loans guaranteed approval Canada. If you’re experiencing significant economic problems and declined for a financing by conventional banks, do not be seduced by advertising that states “… poor credit personal loans guaranteed approval Canada …” even if you have bad credit or no credit.

Poor credit personal loans guaranteed approval Canada: They try to trick you with seductive marketing slogans

They use catchy marketing tag lines such as:

  • 100% Free, Bad or No Credit, Great Terms, $0 Down, Fast, Apply Now!
  • Borrow Up To $5,000 With Affordable Payments. Find out more & Get Started!
  • No Credit Check Loans. Negative Credit Loans. Payroll Loan. Payday Loan.

Or they send either an email or letter in the mail offering you a bad credit loan, student loan, mortgage, negative credit score loan, or a fantastic bad credit, credit card offer.

Poor credit personal loans guaranteed approval Canada: Beware of the scammers!

They may seem to be genuine yet beware! They will certainly ask you for your personal ID and financial info; and that is where your issues will certainly begin.

These are rip-offs! They are victimizing you because they know you are desperate and will not stop until you get the funding from someone for a bad credit loan.

Poor credit personal loans guaranteed approval Canada: What the Canadian Anti-Fraud Centre has to say

According to the Canadian Anti-Fraud Centre, advertisements that promise guaranteed approval loans generally show up online or in city and national newspapers, magazines and tabloids. Remember, just by advertising through reputable media outlets does not make the business behind the ad honest or legitimate.

Poor credit personal loans guaranteed approval Canada: The up-front fee scam

These companies usually ask you to pay an up-front fee before they will start work. This fee might vary from hundreds to thousands of $$$. You rarely get your funding after paying the up-front fee. If you do, it is on the most onerous terms. You can never get your money back.

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Poor credit personal loans guaranteed approval Canada: How to fix your bad credit and debt issues

If you have actually been declined for a loan through a normal lender, then that is a signal that you have debt concerns that have to be handled. Companies that advertise poor credit personal loans guaranteed approval Canada are scams. They are not the solution to your troubles; expert help is.

Contact Ira Smith Trustee & Receiver Inc. today. We are professional trustees. As such, the Canadian government licenses and supervises us. First, we will assess your situation and help you to come to the very best possible solution for your troubles.

When you come to us for your free consultation, we first check and figure out with you if one of the bankruptcy alternative choices is best for you. These include credit counselling, debt consolidation or a consumer proposal. If none of those options are available to you, only then will we discuss the bankruptcy route. Starting Over, Starting Now we can help recover you to financial health.

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CREDIT SCORE IMPROVEMENT: HOW TO HANDLE EVERY CREDIT SCORES CHALLENGE WITH EASE USING THESE TIPS

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Credit score improvement: Introduction

It seems that we’ve become obsessed with credit score improvement and credit scores. Traditionally the singular purpose for credit scores was to find how much of a risk you would present to a lender if you were applying for a credit card, insurance, loan, mortgage, rental unit, etc.

Now we even use credit scores to decide if your new date is worthy of becoming your new mate and employers use credit scores to screen job applicants. Somehow from determining credit worthiness, credit scores are now being used as a quasi-personality test to find out your character and level of honesty.

Credit score improvement: Should credit checks be used to screen job applicants?

“Credit reports were not designed as an employment screening tool,” says non-profit group Demos. “Employment credit checks are an illegitimate barrier to employment, often for the very job applicants who need work the most.” In a survey of job-seekers, Demos found that one in seven people with blemished credit said that they’d been denied a job as a result.

On the other side of this issue is credit reporting agency, TransUnion. They stand firm on the use of its reports when determining a person’s employability. “One study found a job applicant with a troubled financial history was almost twice as likely to engage in theft as an applicant who lacked any financial history issues,” company spokesperson Clifton O’Neal said in an email.

Credit score improvement: How is your credit score determined?

There are several factors that go into determining your credit score:

  • Debt history
  • Payment history
  • Amounts owed
  • How long you’ve been in debt
  • Type of debt
  • Length of credit history
  • Credit inquiries

Credit score improvement: What does your credit score really say about you?

Your credit score means that you’re making your payments on time but it doesn’t tell the story. Many people find themselves in financial difficulty as a result of illness, job loss, divorce or many other factors and that doesn’t make them “undesirables”.

Credit score improvement: Do you really need debt repair?

Are you in financial difficulty and looking for someone to help you get back on track? Call Ira Smith Trustee & Receiver Inc. We’re here to help, not judge. Make an appointment for a free, no obligation consultation and take your first step to debt free living Starting Over, Starting Now.

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SEARS CANADA IS CLOSING: THE #1 REASON YOU HAVE TO RUN AND NOT JUST WALK TO REDEEM YOUR GIFT CARDS AND CREDITS

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Sears Canada is closing: Introduction

It is the end of a Canadian retail symbol. Sears Canada is closing every one of its remaining 130 stores. After 65 years of business in Canada, Sears Canada is closing.

On Friday, October 13, 2017, the Ontario Superior Court of Justice Commercial List, under the Sears Canada CCAA process, issued the liquidation order. The final Sears Canada liquidation sale will begin and then the final Sears Canada stores closing happens. The reason for this is because there were no practical Sears Canada bids for the Court to consider from the entire bid process. The only alternative was complete liquidation. So the Court has now ordered that Sears Canada is closing.

Sears Canada is closing: I hate to say I told you so, but on June 21, 2017…

I gave the history of Sears Canada in my June 21, 2017 vlog, SEARS CANADA CLOSING DOWN: THE SEARS CANADA NEWS RELEASE LEADS ME TO THIS CONCLUSION. I also talked about the problems today in the North American retail industry and provided my personal belief that:

“Sears Canada are as good as finished. It is just currently an issue of time before the last pieces are marketed and sold.”

So, that we now know Sears Canada is closing is not a surprise to me or my readers.

Sears Canada is closing: I hate to say I told you so, but on August 2, 2017…

In my August 2, 2017 vlog, SEARS CANADA NEWS TODAY: ARE THEY SABOTAGING THEIR OWN RESTRUCTURING?, I talked about the public backlash at that time. I spoke about the social media campaign against the Sears Canada key employee retention program (KERP) proposed payments to senior management.

This KERP program implementation happened while the ordinary Sears Canada employees and retirees were being hurt. They knew they were not going to receive all of their benefits and pension payments or any severance or termination pay.

I then provided my personal assessment that:

“You must wonder if Sears Canada really wants to restructure, or if they are just liquidating their inventory. They are also trying to sell whatever other assets they can. If it was a true restructuring, you would think that senior management would want to see more customers who would be loyal to (the new) Sears Canada when it would exit bankruptcy protection.”

We now see that there is no possibility of restructuring. Just a Sears Canada liquidation and then Sears Canada is closing. I am proud of my professional opinions. However, it gives me no joy to see that the remaining 12,000+ Sears Canada employees will for sure now end up on the Sears Canada list of creditors.

Sears Canada is closing: I hate to say I told you so, but on September 27, 2017…

In my September 27, 2017 vlog, “TORONTO BUSINESS BANKRUPTCY PROTECTION: NDP WANTS FEDERAL INSOLVENCY LAWS CHANGED SO THERE IS PENSION PLAN SECURITY WHEN FINANCIALLY TROUBLED BUSINESSES FAIL”, I told you about Hamilton Mountain MP Scott Duvall. He is the New Democrats’ pension plan critic. He said that he will present a private member’s bill to secure employees’ pension plans and benefits. His bill will also pressure business to offer termination or severance pay, prior to paying secured lenders.

Mr. Duvall anticipated that Sears Canada is closing. We will have to see if his effort gets any traction.

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Sears Canada is closing: The liquidation agreement

The Company intends to begin the liquidation sales by today. So you’re going to see offers at existing Sears Canada stores. Many of the store employees will keep their job during the liquidation. However, most of the 800 or so staff members at Sears head office in Toronto have now been let go.

Sears Canada became part of an Agency Arrangement with a legal joint venture. It consists of:

  • Gordon Brothers Canada ULC;
  • Merchant Retail Solutions ULC (collectively, with Tiger Capital Group, LLC and GA Retail Canada ULC.

The liquidation agreement dated October 7, 2017 has arisen from the solicitation procedure. BMO Nesbitt Burns Inc. (“BMO”), the Sears Canada financial advisor, obtained proposals from 7 prospective liquidators. The liquidation proposals were to help the Sears Canada Group with liquidating the inventory, furniture, fixtures and equipment remaining throughout Canada.

Sears Canada is closing: How the liquidation will work

The liquidation is to begin no later than October 19, 2017. The liquidation sales will continue for 10 to 14 weeks. The outside day for finishing the liquidation sale right now is January 21, 2018.

The liquidation will take place at all remaining Sears Canada full-line and home store locations. It may also happen at some of the Sears Canada distribution centres. Sears Canada will receive a guaranteed minimum recovery of:

  • 83% of the cost value of the inventory included in the liquidation sale at the full-line stores; and
  • 52.5% of the cost value of the inventory included in the liquidation sale at the Sears Home stores, subject to certain exceptions.

You may be able to snap up some bargains to put under your Christmas tree as Sears Canada is closing.

Sears Canada is closing: The honouring of Sears Canada gift cards, gift certificates, merchandise credits

Although Sears Canada is closing, gift cards and certificates and merchandise credits are honoured. No gift cards or certificates will be sold. Returns will not be allowed when it comes to any kind of goods offered throughout this Sears Canada liquidation process or the liquidation approved earlier by the Court on July 18, 2017. The Company will then have a time period to clean up and vacate the stores while Sears Canada is closing.

Sears Canada is closing: A Sears Canada warranty won’t be honoured

As far as warranty claims, if the warranty is from a third-party, then you may claim on any warranty for a product purchased at Sears. If it is a Sears Canada warranty, then you are out of luck. That warranty is now worthless because Sears Canada is closing.

Is your business showing early warning signals of financial problems? Are you scared that it too may have its own “Sears Canada is closing” scenario?

If you’re trying to find a way to reorganize your company’s financial debt, call Ira Smith Trustee & Receiver Inc. Don’t wait until it is too late and corporate bankruptcy is the only answer. If we meet with you early enough, we can develop a Sears Canada chapter 11 like restructuring and turnaround plan. The plan will be to save your company and the jobs of many people. It does not have to end in a “Sears Canada is closing” scenario.

Our technique for every person is to develop an outcome where Starting Over, Starting Now happens, beginning the minute you stroll in the door. You’re just one call away from taking the essential action steps to get back to leading a healthy and balanced stress and anxiety free life.

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DEFINED BENEFITS PLANS: THE COMPREHENSIVE GUIDE TO RETIRING HAPPY WITH YOUR DEFINED BENEFIT PENSION PLAN

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Defined benefits plans: Introduction

Many Canadians sleep well knowing that when they retire they’ll be well taken care of with their defined benefit pension plan and government pension programs. Defined benefits plans are the Cadillac of pension plans. They guarantee a set pension amount for life, regardless of how the plan performs.

Defined benefits plans sound great, don’t they? Employees from Sears, Nortel, Northstar Aerospace and others thought so too. That is until corporate bankruptcy turned their dream retirement into a nightmare.

Defined benefits plans: Should you be worried about your Defined Benefit Pension Plan?

“At the end of the day, your (defined benefit) pension is only as good as the amount of assets in the fund. So you better hope it’s fully funded”, says the lawyer Mark Zigler of Koskie Minsky.

The problem is that low returns from low-interest rates and high costs due to retirees living longer have made it increasingly difficult to fund defined benefits plans. In Ontario, under funding affects 30% of defined benefits plans. This is according to the latest report by the Financial Services Commission of Ontario (FSCO). The same situation exists in Quebec. According to data by Retraite Québec (RQ), 29% of plans are running deficits.

The implicit assumption is that the employers who sponsor these plans will remain solvent or that the plans don’t cease to exist.

Defined benefits plans: What happens to your defined benefit pension plan if the company you work for goes bankrupt?

If the company becomes insolvent and the pension plan is underfunded, this will expose retirees to the pension losses. Under Canadian law, retirees are treated like unsecured creditors. This means that the retirees’ claims will only be considered after those of secured creditors like banks.

If you’re fortunate enough to have a defined benefit pension plan, hopefully it’s fully funded. Unfortunately there are many retirees whose hopes and dreams were dashed when companies they worked for went bankrupt.

Defined benefits plans: What if your debt payments are greater than your retirement income?

With a mindset that they had a well-funded retirement, there are seniors who are accumulating debt they can’t hope to repay. If you’re being strangled by debt contact Ira Smith Trustee & Receiver Inc. We can’t give you back defined benefits plans. However, we will help you conquer debt. With our help, you will get back your peace of mind, Starting Over, Starting Now. Give us a call today.

UPDATE: CHECK OUT OUR NEW VLOG BY CLICKING ON:

SEARS CANADA IS CLOSING: THE #1 REASON YOU HAVE TO RUN AND NOT JUST WALK TO REDEEM YOUR GIFT CARDS AND CREDITS

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CANADA MORTGAGE STRESS TEST: WE EXPOSE THE SECRET TO TURN YOU FROM ZERO TO HERO

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Canada mortgage stress test: Introduction

Suggested changes from the Office of the Superintendent of Financial Institutions (OSFI) have left people with some misunderstandings about the Canada mortgage stress test. The idea is a little frightening to a lot of people. So I wanted to give this information to hopefully settle a lot of nerves.

The most fascinating (and most misunderstood apparently) is the mandatory stress testing of brand-new mortgages. The new OSFI proposal titled “Draft Guideline – Residential Mortgage Underwriting Practices and Procedures” involves a new Canada mortgage stress test procedure. But the greatest changes are checking if borrowers could manage an interest price hike of 2% more than they’re paying. OSFI also recommends a re-calculation of the loan-to-value (LTV) ratio.

The real issue isn’t really screening for new home loans. Just Toronto and Vancouver and are truly getting an a ** whipping from the new suggested policies. The problem is, there is lots of online chatter providing misinformation. Many blogs are declaring that lots of existing homeowners that could have overpaid in some markets, won’t qualify on renewal. That’s not exactly true.

OSFI states that a “residential mortgage” for the purpose of the suggested new stress testing includes any loan to a borrower secured by residential property. The following loan products also apply:

Canada mortgage stress test: Stress testing rate hikes

OSFI verified that certain existing consumers would not undergo stress testing. The 2% higher rate test will be avoided if they renew at the very same financial institution. If you can, simply renew at your existing lending institution. That way you will not need to show that they can manage their mortgage at the greater rate.

Those intending on locking in a better rate at a new financial institution, would certainly have to undertake the Canada mortgage stress test procedure like a new debtor. Many people may not feel they can pass the new proposed stress testing rules. So they may not be able to shop for the cheapest mortgage rate. They also won’t lose their homes because of the new stress testing if they renew with their existing mortgagee.

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Canada mortgage stress test: Stress test LTV ratios

What happens if your home’s value experiences a real decline? What if your uninsured mortgage drops below the threshold and would now need being insured? If you’re moving to another financial institution, you could be in big trouble. You’ll have to go through the stress testing. The new lender will tell you if you qualify on rate and value.

OSFI’s proposed new guidelines also states lenders need to update the debtor and residential or commercial property analysis periodically. Not necessarily just at renewal. They make this recommendation as part of properly assessing credit score risk.

Widescale capitulation of real estate markets, would give the regulator a bigger problem. Your lending institution doesn’t want your house. They want the rate of interest on your home mortgage paid.

It’s not exactly in their best interest to voluntarily update the LTV ratio of your home with routine frequency. They could, yet that does not make a great deal of economic sense to try to seize homes that are dropping in value. The lenders want their borrowers to stay current with their payments and not look for a technical reason to take over your home.

Canada mortgage stress test: Meet your new predator, The Big 5

As I stated above, the most fascinating thing is borrowers at danger of falling short on the refinance stress test, won’t be able to go shopping about for better prices. With half of all Canadian bank revenues coming from mortgages, and with growth set to taper– you better believe somebody is going to take up the slack.

Ironically, those that cannot manage to pass the stress test, will possibly be charged a higher rate of interest by their lender!

Canada mortgage stress test: Are you stressed out over not being able to pass the new Canada mortgage stress test guideline?

If you or your business are stressed out by your debt, regardless of what type it is, we can help you. The Ira Smith Team has lots of experience in helping people and businesses restructure their debt and avoid bankruptcy. Call the Ira Smith Team today and book your free consultation. We treat everyone with compassion and respect, while together we solve your debt problems, so you can be Starting Over, Starting Now!

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RETIREMENT PLANNING ADVISOR: HAVE YOU GIVEN ENOUGH THOUGHT TO YOUR RETIREMENT PLAN?

 

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Retirement planning advisor: Introduction

We’ve written many blogs about Canadians who haven’t saved for their retirement and now find their golden years less than golden. You, on the other hand have been saving, perhaps with the help of a retirement planning advisor. So your retirement should be relaxing and fun filled. Unfortunately that’s not necessarily the case. You may not have given enough thought to your retirement plan.

Retirement planning advisor: When you planned for retirement, how long did you plan for?

Canadians are living much longer than past generations. In fact the fastest growing age group is centenarians (Statistics Canada). And now, new census data reveals that for the first time in history the percentage of seniors (16.9%) now exceeds the number of children (16.6%).

Have you planned for what could be a 30-year retirement? The Government of Canada is recommending just that.

Retirement planning advisor: Do you know how much money you would need to retire?

According to a 2015 BlackRock survey:

  • 40% of Canadians said they only had a general sense of how much money they’d need to retire
  • 33% said they had no idea what-so-ever how much money they’d need to retire

Retirement planning advisor: How much money will you get in government pensions?

Most Canadians depend on Old Age Security (OAS), Canada Pension Plan (CPP) and Guaranteed Income Supplement (GIS) for the all or most of their retirement income. Do you have any idea how much money this amounts to? This federal government calculator will give you a rough estimate of how much income to expect from CPP and Old Age Security once you retire.

Retirement planning advisor: Have you planned for the unexpected?

You may plan to work well into your 60s, 70s or beyond; but what will you do if you have to retire early because:

  • Your health won’t permit you to continue working
  • You have to assume the role of a caregiver for a loved one
  • You or a loved one require additional care

Even though you’ve been saving, it doesn’t mean you’ll have a well funded retirement. When making your retirement plan, take all of the things we’ve discussed in this blog into consideration.

Retirement planning advisor: How to get rid of a troublesome debt load

If you’re still carrying a troublesome debt load, you need more than just a retirement planning advisor. Now is the time to call a professional trustee. The earlier you can out debt behind you, the more you can save. Give the Ira Smith Team a call today and Starting Over, Starting Now your golden years will look a lot more golden.

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