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Sears pensioners hope to recoup their losses in $509M lawsuit

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A court decision has given Sears Canada retirees hope they can recoup some of the millions of dollars missing from the now-defunct retailer’s underfunded pension plan. 

An Ontario Superior Court judge on Monday granted approval for two lawsuits targeting U.S. billionaire businessman, Eddie Lampert and his hedge fund, ESL Investments, in connection with $509 million in dividends paid to Sears Canada shareholders in 2013.

The lawsuits — each initiated on behalf of Sears creditors including pensioners — centre on the same claim: that the $509 million payout was detrimental to the company and was orchestrated by Sears’ Canada’s largest shareholders — Lampert and ESL — for their own benefit.

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

The plaintiffs also allege that Sears Canada’s board of directors at the time failed to do their “due diligence” before authorizing the dividend payment which “crippled the retailer’s ability to remain in business.”

Two former directors, William Harker and William Crowley, are also named in the suits. 

“It angers me because it has all the appearances of just taking the money without consideration for the company,” said Ken Eady, a pensioner and vice-president of the Sears Canada Retiree Group, a volunteer organization representing retirees.

At the time of the dividend payment, Sears had an operating loss of $187.8 million and the pension fund was short $133 million, according to court documents.

“If it had been a balanced approach, they would have said, ‘No, we shouldn’t have paid this dividend,'” said Eady.

Sears pensioner Ken Eady is vice-president of the Sears Canada Retiree Group, a volunteer organization representing retirees. (CBC)

In court documents, lawyers for the two former directors claim that “it is an illogical stretch to conclude that the 2013 dividend” in any way contributed to Sears’ insolvency which didn’t occur until June 2017. 

ESL takes a similar stance. 

“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 in a statement.

He said that after the dividends were paid in 2013, Sears had “minimal debt” and $514 million in cash on its balance sheet.

Lampert is chair and CEO of ESL as well as chair of Sears Holdings in the U.S., which filed for bankruptcy protection last month with plans to restructure.

Payback

The goal of the lawsuits is to recoup money for Sears Canada creditors including 18,000 retirees who had their pensions cut by 20 per cent after the retailer folded and left behind an underfunded pension plan.

“I am so ecstatically happy,” said retiree, Gail McClelland upon news of the court action.

“We worked all our lives for that pension and to get that [money] back would be the happiest day of my life.”

According to court documents, retirees claim Sears owes them nearly $730 million which includes $260 million for the pension fund shortfall and $421 million for lost retiree health benefits. 

As a result of a tentative agreement in October with Sears Canada’s estate, pensioners stand to collect about $48 million of what they’re owed. 

Meanwhile, they’re living with reduced pensions, forcing some to return to work to make ends meet.

Sears retiree Gail McClelland worked in furniture sales in Calgary for most of her 33-year career with Sears. (Submitted by Gail McClelland)

McClelland starting looking for a job in September.

“At this age, who’s going to take me back?” said the 69-year-old widow who worked in furniture sales in Calgary for most of her 33-year career with Sears.

It’s total disappointment. I should be enjoying my life which I worked all my life for and now I have to go back to work because somebody compromised my pension.”

Long road ahead

McClelland hopes her situation will eventually improve, but she’ll have to wait for the verdict in what’s likely to be a long and costly court battle before finding out if retirees will reap any rewards. 

She suggests retirees could have avoided a legal battle if the federal government had created legislation that guaranteed workers’ pensions when corporations collapse. 

“If the laws were in favour of protecting pensioners and pensions, we would not have to be going through this.”

In Ontario, Sears retirees are currently faring better than their colleagues elsewhere because of a provincial law that guarantees the first $1,500 of monthly pensions for retirees in defined benefit plans.

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Real Estate

Montreal real-estate prices climbing much faster than Toronto or Vancouver: study

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MONTREAL — The cost of housing per square foot has skyrocketed in Montreal while other cities saw little change over the last year, according to a new national survey.

The study found that condominium prices in downtown Montreal are up 13.5 per cent from last year to, on average, $805 per square foot.

That’s not as high as other cities, but it’s catching up — and Montreal’s rate of growth is outpacing other major Canadian cities.

Toronto’s condo prices grew to $1083 per square foot, an increase of just under 10 per cent, according to the study. In Vancouver, where you can find some of Canada’s most expensive condo prices, rates are down 4 per cent to $1192 per square foot.

To make the comparisons, Canadian real estate giant Century 21 collected data from real estate boards across the country to calculate the home costs per square foot.

“It’s important to compare apple to apples,” said Todd Shyiak, the company’s vice president of operations.

Montreal’s rise was even more explosive for detached homes and townhouses.

Detached houses in Montreal’s downtown and southwest rose to $958 per square foot, 40 per cent up from last year.

“It’s wild,” said Century 21 broker Angela Langtry. She says the pandemic raised demand.

“People had a lot of time to figure out they don’t like the home they’re in,” she said. “They all want pools.”

There was a big spike in sales, she noted, following a pause in brokerage during the spring, at the peak of the pandemic.

Experts say the pandemic will push people into the suburbs as they search for affordable housing and home office space.

“A huge portion of our society’s housing needs changed overnight,” said Shyiak. People “no longer need to be 10 minutes from the office.”

He says that could mean less demand for condos in the future. “People want their own front door,” he said.

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Carttera buys prime downtown Montreal development site

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Carttera has acquired a prime downtown Montreal site at 1455 De La Montagne St. which will mark its third development on the thoroughfare.

“We think it’s probably one of the best, if not the best, locations in the whole city,” Carttera founding partner Jim Tadeson told RENX. “We’ve had great success on De La Montagne.”

The two earlier projects are: L’Avenue, a building with 393 residential units, 84,000 square feet of office space and 34,000 square feet of retail that was developed with Broccolini and occupied in 2017; and Arbora Residences, a two-phase development with 434 rental and condominium units in three buildings being built in partnership with Oxford Properties.

Thursday’s latest acquisition, for $48.5 million from 630745 Ontario, is a 31,750-square-foot surface parking lot with flexible mixed-use zoning on the corner of De La Montagne and De Maisonneuve Boulevard West.

The site is near the Vogue Hotel Montreal Downtown, the new Four Seasons Hotel Montreal and high-end retail.

“It’s zoned for up to 203,000 square feet of density, which we’re going to take advantage of,” said Tadeson. “Our vision for the site is a condominium project with some retail.”

Since there is no demolition required and no heritage issues to contend with, Toronto-based Carttera plans to move ahead quickly with the luxury project.

It’s in the concept design phase and Tadeson said it could take six months or more before it’s prepared to make a submission to the city.

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Montreal Has the Hottest Real Estate Market in Canada Right Now

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If you thought Toronto’s real estate market was on fire, it’s time for a second take, because the market in Montreal is the hottest in all of Canada right now.

A newly-released annual report from CENTURY 21 Canada reveals that, following an early-spring decline due to the COVID-19 pandemic, sales numbers are bouncing back and house prices across the country are maintaining their strength. The study compared the price per square foot of properties sold between January 1 and June 30 of this year, compared to the same period last year.

In Toronto and Vancouver, unsurprisingly, prices remain high. But while regions across the country are seeing varied stories when it comes to their housing market fluctuations, Montreal stands out — there, prices have increased dramatically since 2019. While the numbers remain lower than Toronto and Vancouver, that housing market is proving to be the country’s strongest right now.

In Quebec’s largest city, prices have increased significantly since last year, particularly in the downtown detached house and townhouse markets. For example, the price of a detached house in Montreal’s downtown and southwest rose 42.14% to $958 per square foot, while townhouses went up 44% to $768, and condos, 13.55% to $805. Comparatively, in Toronto and Vancouver, prices saw more modest increases or, in some cases, even declines.

“Even though real estate in Quebec was not considered an essential service, we have seen strong demand and a jump in prices in 2020,” said Mohamad Al-Hajj, owner of CENTURY 21 Immo-Plus in Montreal.

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