Sears Canada Oppression
On October 21, 2015, 1291079 Ontario Limited issued a statement of claim against Sears Canada Inc., its directors and its corporate parents, ESL Investments Inc. and Sears Holding Corporation seeking damages for conduct contrary to the Canada Business Corporations Act (the “CBCA”) . The claim alleges that the payment of a $509 million extraordinary dividend by Sears Canada on December 6, 2013 was oppressive and contrary to the CBCA.
The extraordinary dividend followed steps taken by Sears Canada in 2013 to liquidate many of its most valuable assets, including hundreds of millions of dollars realized by giving up valuable below-market long-term leases in prime Canadian shopping centres such as Toronto’s Eaton Centre and Yorkdale Shopping Centre. Sears Canada’s directors elected to pay out the extraordinary dividend. The primary beneficiaries of the extraordinary dividend were Sears’ American parent corporations, Sears Holding Corporation and ESL Investments Inc., which are primarily owned by US hedge-fund billionaire Edward Lampert.
Sears Canada’s financial performance has only deteriorated since the payment of the extraordinary dividend.
On June 22, 2017, Sears Canada filed for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”). Sotos LLP is class counsel in a certified class action against Sears Canada brought by 1291079 Ontario Limited, formerly a Hometown Dealer in Woodstock, Ontario (the “Class Action”). The Class Action is on behalf of all Hometown Dealers operating from July 5, 2011 to March 17, 2015. The Class Action has been stayed as a result of Sears Canada’s CCAA filing.
The presiding judge over the CCAA procedure has ordered that Sotos LLP and Blaney McMurtry are appointed as representative counsel to represent the interests of the Class with respect to advancing a claim on behalf of the Class pursuant to the Claims Procedure Order dated December 8, 2017 in the CCAA filing.
January 29, 2018: 1291079 Ontario Limited’s motion to have MNP appointed as financial advisor to the Class was adjourned. A copy of the Endorsement can be viewed here.
January 25, 2018: Sotos LLP and Blaney McMurtry are appointed as representative counsel to represent the interests of the Class with respect to advancing a claim on behalf of the Class pursuant to the Claims Procedure Order dated December 8, 2017 in the CCAA filing. A copy of the Order can be viewed here.
January 25, 2018: See Notice to Class here.
January 19, 2018: We are seeking a representative order in the CCAA to represent the Hometown Dealers. We are also seeking to have MNP LLP appointed as financial advisors to the class. This motion will be heard January 29, 2018. Our intent is to file a Proof of Claim on behalf of the class setting out the class’ damages.
June 22, 2017: Sears has filed for creditor protection under the Companies’ Creditors Arrangement Act (the “CCAA”). This filing stays (puts on hold) the class action. We are currently reviewing and assessing the class’ rights in the CCAA filing.
October 21, 2015: A statement of claim was issued alleging that Sears oppressed the class members when it paid out a $500 million dollar dividend to its shareholders in December 2013. A copy of the statement of claim can be viewed here.