Sears has been experiencing financial trouble for a few years now, and back in late June, it finally bit the bullet and filed for bankruptcy. This is a significant concern for those employees facing (or already dealing with) layoffs as a result. Worrying about pension payouts, not to mention the ability of former employees to make ends meet after the job loss, is weighing heavily on those most directly impacted by Sears’ decision to file.
According to CNN, early in June, “Sears Canada said it hoped to be able to restructure and emerge from bankruptcy later this year. It did not give any details about store closing plans or staff cuts it might make as part of its restructuring.” However, since that time, the retail giant has announced the closing of almost 60 stores and job cuts for almost 3000 people.
Sears began making moves earlier this year. Back in March, as CBC News reported, when the Coburg location closed, employees found themselves out of work, and because of the regulations regarding bankruptcy, severance packages were not required. For many employees, this has meant a major hit financially. Retired employees are also concerned about what this filing could mean for their pensions.
As CBC News noted, “deep financial troubles left the iconic retailer with no choice but to seek court protection from its creditors while it restructures. As part of the court proceedings, Sears said it’s not able to make payments to a number of stakeholders, including laid-off employees owed severance… As far as retiree benefits and pensions are concerned, Sears contends it’s too early to predict what will happen and claims employee pension payments may not be compromised.”
While Sears has stated that former employees can make claims as far as compensation, chances are the results won’t be worth the effort as bankruptcy proceedings ensure secured creditors get priority.
Many of these jobs will be cut without much notice, and those employees, regardless of their years of service, will be left with nothing.
For many, especially with the recent BOC interest rate hike, this could spell disaster. An inability to meet monthly financial obligations could quickly become problematic.
Whether you’re a former Sears employee, or just concerned about your finances and debt in general, Spergel is here to help. We can help you understand your options for debt relief and better financial stability.
Call us today, toll free, for a free consultation: 310-4321.