Commercial litigation: Sears Canada payout problems

Shareholders in Sears Canada were paid millions of dollars while the company was floundering in 2013. An  insolvency monitor appointed by the court has found that those payments are accompanied by unresolved concerns. The findings could lead to major commercial litigation in Canada. 

The monitor is preparing, in fact, to ask the Ontario Superior Court to begin a suit against a hedge fund and investment company owner regarding the payment of $509 million to company shareholders. Eddie Lampert and his hedge fund, ESL Investments, were major shareholders in Sears Canada. Lampert is chairman of Sears Holdings in the U.S. The monitor alleges that Lampert and two former directors of Sears Canada had influence on the payout decision.

Retirees and creditors of Sears Canada have petitioned Ontario Superior Court to review the almost $3 billion payout to shareholders between 2005 and 2013. Retirees would like to recoup some of those funds since their pensions were reduced by some 20 per cent due to Sears Canada insolvency issues. They claim the money paid to Lampert's hedge fund should have been theirs. The monitor believes the court should consider whether dividend payments doled out in 2013 are in line with what is known as a transfer at undervalue under the Bankruptcy and Insolvency Act of Canada.

Commercial litigation cases can often involve people whose lives have been changed by alleged financial misappropriation. A lawyer in Canada will be able to offer advice whether a dispute involves commercial agreements, contracts, relationships, compliance matters or allegations of negligence. Business-related litigation is complex and a lawyer will be able to tailor his or her approach to a client's specific needs.

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