Sears Canada Employee Hardship Fund That's Supposed to Hold $500,000 is Missing $200K
A $500,000 hardship fund created for former Sears Canada employees is facing a possible $200,000 shortfall, according to court documents.
The problem appears to be with a Sears executive who pledged to donate the $200,000 from a retention bonus, but may now be hesitating to cough up the cash.
"There is uncertainty regarding the agreement of the [bonus payment] beneficiary who previously proposed to contribute such funds to now proceed to contribute those funds," the court-appointed monitor for Sears Canada says in the latest report to Ontario Superior Court.
The hesitant beneficiary appears to be Sears executive chairman Brandon Stranzl. He's heading up a bid to buy the retailer, but talks are not looking promising.
Ursel Phillips, the law firm representing current and former Sears employees, fought for the hardship fund for destitute laid-off workers. The firm's lawyer, Susan Ursel, said that as far as she knows, Stranzl had intended to donate the fund's entire amount of $500,000.
She says it's her understanding he has already donated $300,000 from his retention bonus, but has not yet offered up a second lump sum of $200,000 from his second bonus payment, which he received in late September.
During Sears bankruptcy hearings Wednesday, Ursel asked that executives stop receiving retention bonus payments until the matter is resolved.
"The judge said, 'That's reasonable, they agreed to a hardship fund, they shouldn't be using this money for other things,'" she said.
Sears Canada agreed to the hardship fund, which got court approval in August and was supposed to supply up to $500,000 for financially strapped employees.
None of the current 3,100 laid-off workers are receiving severance or continued benefits.
All the funding was set to come from the $7.6 million in retention bonuses that the retailer pledged to pay 43 executives and senior managers in instalments during Sears' restructuring.
CBC News asked Sears Canada about the hardship fund's status, but a spokesperson said he couldn't offer any details because the retailer didn't announce the program or confirm which executives were donating a portion of their bonus payments.