Sears Canada Inc. retirees want an Ontario court to award them the remaining roughly $135 million of the former department store chain's cash to help fund their pension shortfall.
Some 18,000 Sears retirees will receive smaller pension benefits than they earned due to a roughly $260 million shortfall in the plan, according to a motion filed in the Ontario Superior Court of Justice on Friday.
Retirees will receive 30 per cent less than their promised monthly pension benefits beginning August 1, the motions reads.
"The retirees are the priority creditors of the estate," it reads, adding that debts to secured creditors have been paid.
The majority of the retirees' benefits are modest, according to the motion, and they rely on them for their daily livelihood.
The retirees are claiming nearly $730 million in total. That includes about $260 million for the pension plan wind-up deficit and $421 million for health, life insurance and other benefits for retirees.
Sears Canada's estate has about $135 million in cash, according to a recent report by FTI Consulting Canada Inc., the court appointed monitor for the retailer's insolvency.
The retailer faces more than 2,000 claims seeking a total of at least $36 billion, according to the report. Though it notes "a significant number" of those claims were either filed multiple times under different claim types or against multiple Sears Canada entities.
"The Supreme Court has confirmed that the pension deemed trust in favour of pension plan beneficiaries continues to apply in CCAA proceedings," wrote Andrew J. Hatnay, a lawyer representing Sears retirees, in an email.
The court will hold a scheduling conference for the motion on Tuesday, and Hatnay said he expects the hearing to be held in September or October.
Sears Canada filed for creditor protection in June 2017 after efforts to reinvent itself failed to muster consumer enthusiasm.
The department store chain's last remaining stores closed their doors for the final time on Jan. 14 this year.