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$509M paid to Sears Canada shareholders could be subject of court case

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An investigation into millions of dollars in dividend payments to Sears Canada shareholders while the company was in decline could soon lead to court action.

On Nov. 19, the court-appointed monitor for the retailer’s insolvency will seek permission from Ontario Superior Court to initiate proceedings against Eddie Lampert and his U.S. hedge fund, ESL Investments, in connection to $509 million paid to Sears shareholders in 2013.

In its notice of motion, the monitor,  FTI Consulting, says it has identified “unresolved concerns” over the dividend payments. Of particular concern, it says, was the apparent limited analysis that informed the decision, which was made at a time when Sears was facing “worsening financial results,” and  ESL appeared “to have had an urgent liquidity need.”

Eddie Lampert is chair of Sears Holdings in the U.S. and ESL Investments. (Sears Holdings)

The monitor also claims there is evidence  Lampert and two then-Sears Canada directors “significantly influenced” the dividend payout decision.

The two former directors, William  Harker and William Crowley, are also named in the potential proceedings. They each had close links to  ESL and  Lampert, according to the court documents.​

Harker and Crowley’s lawyers declined to comment.

None of the allegations in the notice of motion has been proven in court.​

ESL, of which  Lampert is chair and CEO, said the 2013 dividend payments were authorized by Sears Canada’s board of directors at a time when no  ESL executives were members and the retailer was clearly solvent.

“We believe there is no legal basis to reclaim those dividends and any attempt to do so would be without merit,”  ESL spokesperson Michael  Mittelman said.​

Look into it

The investigation into dividend payouts began in January, when the monitor announced it was reviewing $611 million the company paid to Sears Canada shareholders in 2012 and 2013.

Next, Sears Canada retirees and other creditors asked Ontario Superior Court to scrutinize nearly $3 billion paid to Sears shareholders between 2005 and 2013.

That could be a great thing for the pensioners, fantastic thing. – Sears Canada pensioner Ron Husk

The retirees’ aim was to recover some of the money to top up their pension payments, which have been reduced by 20 per cent because of a shortfall in the Sears pension fund.  

“That’s why we wanted an investigation,” said Ken Eady, vice-president of the Sears Canada Retiree Group (SCRG), a volunteer organization representing retirees.

“We wanted to find out if there was money there that should have been ours.”

In March, the court appointed a litigation investigator to look into the dividend payments. 

According to court documents, both the monitor and the litigation investigator recommend proceeding with claims related to the 2013 payouts.

When Sears paid $753 million in dividends in 2010, the approval process “appears to have been robust,” the monitor says. The process included management presentations and meetings with outside lawyers to review the plan, according to court documents.

In 2013, on the other hand, “the board and management devoted significantly less time and analysis” to the process with “limited” correspondence.

FTI Consulting also noted that in 2010, Sears Canada had an operating profit of $196.3 million, but in 2013, it was operating at a loss of $187.8 million.

An undervalued transfer

Based on its findings, the monitor says it believes there’s a reasonable basis for the court to consider whether the 2013 dividend payments represent a “transfer at undervalue” under Canada’s Bankruptcy and Insolvency Act.

“Generally, transfer at undervalue would mean the company is giving something to somebody for less than what it’s worth,” said Toronto-based commercial litigation lawyer Tamara Ramsey.

“They’ve certainly concluded that there’s some evidentiary basis for an argument that the payment of the dividend … rendered the company insolvent, which in essence, is [an argument] the company couldn’t afford to pay the dividend and the shareholders or certain insiders were taking care of themselves.” 

Commercial litigation lawyer Tamara Ramsey says a ‘transfer at undervalue’ generally means a company is giving something to somebody for less than what it’s worth. (CBC)

Sears Canada didn’t file for bankruptcy protection until June 2017. It laid off 17,000 employees with no severance pay before closing its final stores in January.

But in court documents, the monitor argues that in 2013, the retailer was already on “a path to inevitable insolvency.”

The evidence listed includes the company’s “steadily declining financial performance” and its policy of “making significant distributions to shareholders without investing in the growth” of the business.

Sears Canada retiree Ron Husk, 73, had to return to work to make up for the shortfall in his pension payments. (Rhonda Thistle)

Sears Canada pensioner Ron Husk was happy to learn there may be court action involving the $509-million dividend payout.

“That could be a great thing for the pensioners, fantastic thing,” said Husk, who had to return to work as a greeter at Home Depot in Mount Pearl, N.L., to make up for the shortfall in his pension payments.

He says he’s holding out hope some of the dividend money will make its way back to Sears retirees.

“I gave 35 years of my life to Sears. I don’t want to be out working. I’m 73 years old.”

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The cost of renovating your bathroom in Toronto in 2021

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Home renovations can be a big task, especially bathroom renovations where you have to work with either an awkwardly shaped space, or one with lots of pipework and very little natural light.

Nonetheless, getting a bathroom renovation by Easy Renovation to change your existing bathroom layout, improve the ambience or add more natural skylights can be worth all the trouble. But determining how much a bathroom renovation would cost is important while setting a budget.

The pandemic has changed a lot of things with social distancing rules, working from home, and for some, being made redundant. Therefore, having a complete grasp of the financial implication of a bathroom innovation is very important.

Owning your dream bathroom can be made a reality and the good thing is, regardless of your financial situation, there are always available options. If you also decide to put up your property for sale in the future, a bathroom upgrade would be a great investment—as it would add significant value to the property. Your bathroom renovation project, like every home renovation, can either be very affordable or extravagant, but one thing is certain, you’re bound to have a more refreshed, stylish and modernistic space.  

Looking through detailed sketches of luxurious and expensive bathrooms can be quite tempting, especially when you’re on a budget. However, your bathroom can be equally transformed into something that looks just as modern, stylish and refreshing but without the heavy price tag.

Conducting a partial bathroom renovation means you only have to change a little part of your existing bathroom rather than tearing it down and starting from scratch. If you intend to carry out this type of bathroom renovation in Toronto, depending on the size of your bathroom, you can spend between $1,000 – $5,000. With a partial bathroom renovation, you can save money by tackling smaller problems that exist in your present bathroom—or you can just upgrade a few of its features.

Partial bathroom renovations are quite affordable and would leave your bathroom feeling new and stylish without being time-consuming or a financial burden—which is important considering the economic impact of the pandemic. Repainting the bathroom walls, replacing the tiles on the floor and in the shower area are examples of partial bathroom renovations which is the cheapest to accomplish.

A more expensive and popular bathroom renovation is the standard 3- or 4-piece renovation. This renovation type involves a lot more services that are not covered by a partial renovation budget. To execute a standard bathroom renovation in Toronto you need a budget of about $10,000 – $15,000.

Unlike with a partial renovation, you would have to make a lot more changes to various elements of your bathroom without the hassle of changing the overall design. You can easily restore your current bathroom into a modernistic and classy space that fits your existing style. Making changes to more aspects of your bathroom is quite easy since there is more room in your budget to accommodate it.

A standard 3- or 4-piece renovation includes everything in a partial renovation plus extras such as revamped baseboards, installing a new bathroom mirror, buying new lights, installing a new vanity, changing the toilet, and buying new shower fixtures.

If you’re one of those looking to make a complete overhaul of your existing bathroom, then the option of a complete bathroom remodel is for you.

Unlike a bathroom renovation, remodelling means a complete change of your current bathroom design and layout for one that is newer and completely unrecognizable. The possibilities when remodelling a bathroom are endless especially when you have a large budget of over $15,000. That way, you can get the opportunity to create the perfect bathroom for yourself.

In addition to all that’s available with a standard bathroom renovation, bathroom remodelling allows you to make bathtub to shower conversion, relocation of plumbing, relocation of the toilet, reframing the bathroom and even relocating the shower.

In conclusion, a bathroom renovation can be a very important upgrade to your home and depending on the features that you decide to include, in addition to the size of your bathroom, this would influence the total cost of the project.

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7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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