Nordstrom Canada

This morning we attended a motion at the Ontario Superior Court of Justice where Chief Justice Morawetz heard Nordstrom Canada’s motion seeking approval of the appointment of a liquidator to engage in a sale to realize upon Nordstrom Canada’s assets. No parties opposed the relief being sought.

Chief Justice Morawetz approved (i) the appointment of a contractual joint-venture of Hilco Merchant Retail Solutions ULC, Gordon Brothers Canada ULC,  Tiger Asset Solutions Canada ULC, and B. Riley Retail Solutions LLC to act as liquidators; (ii) the approval of Sales Guidelines; and (iii) the extension of the stay granted during the CCAA proceedings until June 30, 2023. Under the Sales Guidelines, the liquidation sale is scheduled to begin tomorrow and conclude no later than June 30, 2023.

The Liquidation Sale Approval Order is available on the Monitor’s website, here. The materials relied upon by Nordstrom Canada in support of this Order are also available on the Monitor’s website, under the heading Motion Materials.

We will keep you advised of further developments in the CCAA proceedings as they occur, via this website.

Nordstrom Canada has brought a motion that will be heard by Chief Justice Morawetz this coming Monday, March 20th, seeking the Court’s approval of the appointment of a liquidator to engage in a sale to realize upon Nordstrom Canada’s assets.  Nordstrom Canada, with the support of the Monitor, is seeking Court approval for a joint-venture of Hilco Merchant Retail Solutions ULC and Gordon Brothers Canada, ULC to act as liquidators, the approval of Sales Guidelines, and the extension of the stay granted during the CCAA proceedings.

Employee Representative Counsel will be attending and will report back to employees about the proceedings with a further update on our website.

This morning we attended the Comeback Hearing in the Ontario Superior Court of Justice.  The hearing was uneventful, as no parties opposed the relief being sought.  

The Court issued an Order, which extended the CCAA proceedings until March 20, 2023, increased the quantum of certain court-approved charges on the estate, and approved a Key Employee Retention Plan, or KERP.

Under the KERP, certain store employees and non-store employees will receive a one-time lump-sum payment if they continue to provide services to Nordstrom Canada until their termination date, and do not have their employment terminated for cause prior to their termination date.  

The KERP was designed by Nordstrom Canada in consultation with the court-appointed Monitor, to encourage employees whose services are critical to the orderly wind-down of Nordstrom Canada’s business (“KERP Participants”) to stay with the business until their services are no longer required.  

The Monitor, who advises the Court on the operation of Nordstrom Canada’s business during the proceedings, supported the approval of the KERP because: (a) it will provide stability to, and facilitate, the orderly wind-down by encouraging key active employees to remain with Nordstrom Canada, as required; (b) the KERP Participants are considered to be key to the execution of the orderly wind-down and their participation will assist in maximizing realizations for the benefit of stakeholders; and (c) given the nature of the merchandise and scale of store operations, particularly at the full-line stores, the KERP is reasonable and appropriate in the circumstances to ensure that value is preserved and maximized during the orderly wind-down.

KERP Participants will have received a letter via their work email advising them that they are being offered a KERP. This letter advises individual eligible employees of the terms of their KERP, including the applicable percentage of their current annual base salary (or, if applicable, the percentage of their current base hourly wage rate, calculated on an annualized basis) that the one-time lump sum KERP payment will amount to. This is designed to ensure that KERP payments reflect the individual’s level of duties and responsibilities.

KERP Participants will be required to confirm their understanding and acceptance of the terms and conditions of the KERP via DocuSign by March 15, 2023.

Tomorrow, there will be a hearing before the Court to review the Initial Order and continue the CCAA proceedings.  This hearing is required under the CCAA, and is generally referred to as the “Comeback Hearing”.

Employee Representative Counsel will be attending and will report back to employees about the proceedings with a further update on our website.

An Employee Representative Counsel (ERC) is court appointed counsel whose responsibilities include assisting affected employees in a Companies’ Creditors Arrangement Act (CCAA) process like the one your employer is now engaged in.

The terms of our appointment are contained in the Initial Order issued by the Court on March 2, 2023. The Initial Order sets out the scope of our representation rights and provides that we represent eligible employees regarding any employment, human rights or other workplace law issues affecting them in the CCAA Proceedings, including with respect to the Employee Trust Agreement and any future claims process.

Pursuant to the Initial Order, Nordstrom Canada is required to pay our fees and disbursements. However, our responsibilities as Court-appointed officers are to the employees we represent, not to Nordstrom Canada.

Typically, we assist employees in understanding what is happening in the proceedings, in ensuring their payments from the Employee Trust are correct and in accordance with the Trust Agreement and any Court Orders about the Trust Agreement, resolving any disputes about such matters, and where there is a claims process, assisting employees in making employment-related claims other than claims for monies covered by the Employee Trust.

The ERC is also empowered to negotiate with Nordstrom Canada, the Monitor and other stakeholders, on your behalf, to ensure your interests are represented in these proceedings. The kinds of issues an ERC typically negotiates about include individual litigation which has been stayed (stopped) because of the Court Order placing Nordstrom Canada in the CCAA process, and also larger issues with respect to plans of arrangement for the payment of outstanding claims, or access to government programs which may become available to you as a result of the cessation of Nordstrom Canada’s business.

We also remain available to the employees throughout this process to assist with your individual questions about the process, your entitlements and other matters relating to your employment with Nordstrom Canada.

The Court has approved the creation of an Employee Trust, which is designed to ensure that every eligible Nordstrom Canada employee receives their full statutory entitlement to notice, severance, and mass layoff and mass termination pay.

The Employee Trust is being funded by Nordstrom, Inc., and administered by the court-appointed Monitor, Alvarez & Marsal, in collaboration with Nordstrom Canada and the Trustee.

The Employee Trust ensures that after you receive notice of the termination of your employment, you will continue to receive your regular weekly wages for the entirety of your applicable statutory notice period.  However, employees who quit before their separation date will not be eligible for further pay either from Nordstrom Canada or from the Employee Trust after their last day of employment. Further, employees who are terminated for cause will not be eligible for further pay from Nordstrom Canada or the Employee Trust, unless required by applicable employment standards legislation.

How will I receive my pay?

Employees with eligible claims under the Employee Trust will receive their pay as usual through Nordstrom Canada’s payroll system during their applicable statutory notice period (e.g., direct deposit or cheque).

What is my statutory notice period?

Your statutory notice period depends on what province you live in, how long you have been working for Nordstrom Canada, and potentially on the number of employees at your store.

Ontario Employees

The Employment Standards Act, 2000 provides the following termination entitlements:

• Notice of termination:
• Individual notice of termination is between 1 and 8 weeks of pay, depending on your years of service.
• If more than 50 employees from a single establishment are terminated within 4 weeks, the amount of notice required for all employees at the establishment is between 8 and 16 weeks of pay, depending on the number of employees terminated.
• Employees who receive insufficient notice of termination are entitled to pay-in-lieu thereof.

• Severance pay is payable to employees who have worked for Nordstrom Canada for 5 years or more, and eligible employees are entitled to one week of severance per year of employment.

Alberta Employees

The Employment Standards Code provides for the following termination entitlements:

• Notice of termination: Notice of termination is between 1 and 8 weeks of pay, depending on your years of service. Employees who receive insufficient notice of termination are entitled to pay-in-lieu thereof.

British Columbia Employees

The Employment Standards Act provides the following termination entitlements:

• Notice of termination:
• Individual notice of termination is between 1 and 8 weeks of pay, depending on your years of service.
• If more than 50 employees from a single location are terminated within a 2 month period, the amount of notice required for all employees at the location is between 8 and 16 weeks of pay, depending on the number of employees terminated.
• Employees who receive insufficient notice of termination are entitled to pay-in-lieu thereof.

How are my regular weekly wages calculated?

The method for calculating your regular weekly wages is set out in your provincial employment standards legislation.

• Ontario Employees
  In Ontario, an employee’s regular wages for a regular work week is the average amount of regular wages earned by the employee for the weeks in which the employee worked in the period of 12 weeks preceding the date on which the employment was terminated or severed.
• Alberta Employees
  In Alberta, when an employee’s wages vary from one pay period to another, termination pay is calculated using the weekly average of the employee’s regular wages for the 13 weeks in which the employee worked preceding the date of termination.
• British Columbia Employees
  In British Columbia, where hours and pay fluctuate weekly, the calculation is based on the “average” weekly hours, which is the total of all weekly wages during the last 8 weeks in which the employee worked divided by eight.

What if I am not being paid correctly?

If you believe that you are not being paid appropriately, that your claims under the Employee Trust have not been appropriately calculated, or if you have other disputes about your pay during the notice period, please complete a Notice of Dispute in the attached form and send a copy to the Monitor and to us as Employee Representative Counsel.

What if I am on a leave of absence?

If you are currently on a leave of absence (such as pregnancy/parental leave or sick leave), you will be eligible to receive pay based on your average hours or your salary during the notice period from the Employee Trust.

Will my benefits continue?

Yes, it is expected that benefits coverage for participating employees will remain unchanged while you continue working, including health, dental, disability, and life insurance. At this time, benefit claims can continue to be submitted in the ordinary course

For employees in Ontario, benefit coverage will continue after your separation date, as funded by the Employee Trust, if and as required by the Employment Standards Act, 2000.

Nordstrom Canada will provide additional information regarding conversion options and claims deadlines in the coming weeks.

What about the employee discount?

As of today, your employee discount continues; however, this is subject to change during the wind-down process. We anticipate that all employee discounts will cease with the commencement of the formal liquidation sale to be approved by the Court that is expected to begin on or around March 20, 2023.

How will my vacation be affected?

Eligible employees will continue to earn vacation similar to today (and in any event no less than required by applicable employment standards legislation), and will continue to be subject to Nordstrom Canada’s normal policies and procedures regarding approval of time off.

All accrued but unpaid vacation pay will be paid out following your last day worked.

What happens if I quit?

Employees who quit before their separation date forfeit their right to receive payments from the Employee Trust.

What happens if my employment is terminated for cause?

If an employee’s employment is terminated for cause, they will not be eligible for further pay from Nordstrom Canada or the Employee Trust, unless required by applicable employment standards legislation.

Am I giving up any legal entitlements by accepting money from the Employee Trust?

Employees who receive pay from Nordstrom Canada and/or the Employee Trust during their statutory notice period are deemed to release, among others, Nordstrom Canada and Nordstrom, Inc. of liability for the pay they have received.

By continuing to work and receive pay during the statutory notice period, you are not giving up your rights to pursue any claims other than claims for the pay that you are receiving.

What if I have other claims against Nordstrom Canada?

Under the CCAA, the Court will supervise a claims process to determine all the liabilities of Nordstrom Canada, and make a fair distribution to all creditors based on the available funds in the estate.  This process has not yet begun.

We will continue to represent employees with claims for additional compensation above their statutory entitlements as the CCAA proceedings continue, including in any claims process.  We will provide more information regarding that process once the claims process begins.

As you know, on March 2, 2022, Nordstrom Canada Retail, Inc. and several related companies (“Nordstrom Canada”) were granted protection from their creditors under the Companies’ Creditors Arrangement Act (“CCAA”).

Alvarez & Marsal Canada Inc. was appointed as the monitor in the CCAA Proceedings. The monitor oversees Nordstrom Canada’s operations during the CCAA Proceedings as a neutral, Court-appointed officer.  The Monitor maintains a regularly-updated website where court filings can be accessed here.

Our firm has been appointed by the Court as Employee Representative Counsel to represent the interests of all of Nordstrom Canada’s store-level employees and certain non-store employees.  The terms of our appointment are set out in the Initial Order of the Court, in accordance with which our fees will be paid by Nordstrom Canada.

If you do not wish to be represented by our firm you may opt out of this arrangement by completing the Opt-Out form that will be posted on the Monitor’s website and returning it to the Monitor, as directed on the form.

Please note that if you choose to opt-out, you will not lose any entitlement you might have had to monies from the Employee Trust, nor will you lose access to any additional Claims Process that may be carried out in these proceedings. However, any legal assistance which you might have accessed from the ERC, without cost to you, will not be available. If you wish to obtain legal assistance about your rights in this CCAA process, it will be at your own expense if you opt out. We would ask you to consider this matter carefully, as opting out can have financial consequences for you.

If you have any questions about the Opt-Out process, please contact the Monitor at NordstromCanada@alvarezandmarsal.com or 1-844-768-8244.

If you have any additional questions about the proceeding, please email us at NordstromCanada@upfhlaw.ca or call us on our toll-free number at 1-866-308-1771.