Updated: January 14, 2008
INTRODUCTION
This website has been prepared by Koskie Minsky LLP for
the exclusive use of former employees of Dylex Limited ("Dylex") in order to
provide general information on issues affecting you during the bankruptcy
proceedings of Dylex.
FINAL DIVIDEND
The trustee in bankruptcy Dylex has recently announced that a final dividend
payment will be released to unsecured creditors including employees in the
range of 3-4 cents on the dollar. That will bring the employees' gross
dividend payments to approximately 70.14 cents on the dollar of employees'
claims. That is an exceptional result in a bankruptcy. The trustee is
required to deduct amounts from the employees' dividend payments to pay
amounts claimed by HRSDC as well as amounts payable to our firm for the
legal fees of the employees. The trustee expects to release the balance
to employees in early 2008. The trustee has sent a letter to all employees
describing the final dividend payment. If you have not received a copy of
that letter you can send an email note to
sthean@rsmrichter.com, referencing
Dylex and request a copy.
EMPLOYEE ADDRESS CHANGES
We have received many returned envelopes from our past mailings because
employees have moved and not provided us with their current address. If you
have moved, the Trustee will make no effort to locate you and you may have had
a dividend cheque sent to an old address which has been returned to the Trustee
and cancelled.
If you have a change of address, please provide us with your new address in
writing. In your best interest, we do not take changes of address by telephone.
Please send any address change to Koskie Minsky LLP, 20 Queen St. W., Ste. 900,
Box 52, Toronto, ON M5H 3R3. Fax: 416 204-2897 attention: Client Communications
Dept. or by e-mail.
Please also send your address change to the Trustee in Bankruptcy at
sthean@rsmrichter.com.
PAST STATUS
The administration of the estate of Dylex is continuing by the Trustee in
Bankruptcy.
We sent a reporting letter to all Dylex employees on April 10, 2007 providing
a further update regarding the T4 slip you should have received from the Trustee
in Bankruptcy of Dylex (RSM Richter Inc.). The T4 slip will reflect the amount of
dividends payable to you for the taxation year 2006.
To view a copy of the letter, please click here.
On June 1, 2004, we mailed an information letter to all former employees of
Dylex outlining the current status of this matter and enclosing a copy of a
report from Richter dated May 19, 2004 to all creditors which summarized the
major developments to date. To view a copy of our letter, please
click here. To view a copy of the report from Richter, please
click here.
Richter issued another report on July 20, 2005. To view this report, please
click here.
On October 24, 2001, we filed an Omnibus Proof of Claim with the Trustee on
behalf of all terminated employees totaling over $18 million for amounts owing
to the employees from Dylex for unpaid wages, vacation pay, termination,
severance, unpaid expenses, and other amounts. In order to prepare these
claims, we relied on employee records and data provided to us by BiWay and
Dylex head office.
The Trustee disputed a number of the employees' claims. After negotiations and
discussions with the Trustee, the employees' claim amounts have now been
settled.
In the Fall of 2002, Richter released a dividend payment to employees (and
other unsecured creditors) in the amount of 18 cents on the dollar of each
employee's claim. Those dividend payments had to first be cleared through Human
Resources Development Canada ("HRDC") because any employees who received
unemployment insurance benefits after being terminated from Dylex in
July/August 2001 due to the bankruptcy must have the amounts of those benefits
deducted from their dividend payments. The deducted amounts are paid directly
by Richter to HRDC. This is required by HRDC in order to ensure that employees
do not receive an "overpayment" of E.I. benefits.
BACKGROUND OF THE DYLEX BANKRUPTCY
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On August 1, 2001, Dylex obtained court protection from its creditors under the Companies
Creditors' Arrangement Act (CCAA) and soon thereafter terminated over
3,400 employees en masse without paying termination pay and other
amounts owing to the employees;
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On August 17, 2001, Orientex Ind. Inc., a creditor of Dylex filed a motion
before the Court to appoint an interim receiver over Dylex because it had lost
faith in Dylex's management and was concerned that assets were being removed
from the Company improperly. Andrew Hatnay attended in court with terminated
employees and supported the motion. After a day long hearing that was opposed
by Dylex, Mr. Justice Spence granted the motion and appointed Richter as the
interim receiver over Dylex and also terminated court protection for Dylex
under the CCAA. To view a copy of the Endorsement of Mr. Justice Spence, please
click here;
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On August 20, 2001, Andrew Hatnay of our firm attended in Court and Mr. Justice
Spence appointed employee Samuel Martin as the employees' representative and
our firm as employees' representative counsel to represent the terminated
employees of Dylex (which includes BiWay and Fairweather) in its insolvency
proceedings.
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On September 28, 2001, Dylex was placed into formal bankruptcy by the Ontario
Superior Court of Justice and Richter (formerly the Interim Receiver of Dylex)
was appointed the Trustee in Bankruptcy of Dylex.
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On October 30, 2001, the Trustee sold Fairweather as a going concern. The
Trustee has since also sold all the remaining assets of Dylex and is now in the
process of distributing the assets to creditors.
With respect to the employee claim calculations we prepared please note the
following:
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Not all employees are collectively owed wages, expenses and vacation pay;
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Severance pay under employment standards legislation is distinct from
termination pay and only applies to those Ontario employees with over 5 years
of employment service;
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Termination pay was calculated differently depending on which province you
worked in;
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Dylex had a termination/severance policy which we have taken into account in
your claim and have filed the higher amount of either the provincial employment
standards or Dylex policy; Richter has accepted the higher amount as your
claim.
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Your claim for lost group health benefits was calculated by an independent
actuary (Eckler Partners Ltd.) who we retained. This actuarial calculation
involves probability, assumptions and statistics;
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If you had a claim for unpaid expenses, we required a copy of your receipts
together with a written explanation as to what you are owed by Dylex;
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If you had a written employment contract with Dylex and were owed amounts under
that contract, we calculated your claim according to the terms of your
contract;
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For those employees who were off work from Dylex on short-term disability,
leave of absence, maternity leave, worker's compensation and extended benefits
at the time of the bankruptcy, your termination and severance claims have been
reviewed by Richter and dividend payments at the current dividend rate of 18
cents on the dollar have been released to employees;
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We have had discussions with the Ontario, Nova Scotia and British Columbia
Ministries of Labour who advised us that in light of our court appointment to
represent the terminated employees, they would not proceed with any claims that
employees may have filed individually under the Employment Standards Act
and have referred all Dylex employee inquiries to our office. To view a copy of
the letter from the Ontario Ministry of Labour, please
click here.
EMPLOYEES ON LONG TERM DISABILITY AT THE TIME OF THE BANKRUPTCY
Disabled employees who were off work from Dylex and receiving long term
disability benefits at the time of the bankruptcy of Dylex should continue to
receive monthly LTD benefits from Maritime Life, the insurance company that
provided group benefits to Dylex employees while it was an active company.
Fortunately, Dylex insured its group benefit plan for employees (as
opposed to providing a self-funded plan), and Maritime Life is required to
continue to pay disabled employees LTD benefits due to the provisions of the Insurance
Act (Ontario) even though Dylex is bankrupt and no longer a functioning
company.
We filed a claim on behalf of LTD employees for termination and severance pay.
Richter initially disallowed this claim and took the position that employees
who were on LTD at the time of the bankruptcy had their employment contracts
with Dylex "frustrated", meaning that the employment contracts came to an end
without any requirement that the employer provide any termination or severance
pay. On July 15, 2003, we received a letter from Richter setting out their
position. To view a copy of the letter from Richter, please
click here.
We had further negotiations with Richter on this claim in light of a recent
decision of the Ontario Court of Appeal in another case and are pleased to
report that a settlement has been reached. Richter has accepted 50% of the
termination and severance amount of the claims we submitted on LTD employees'
behalf. Dividend cheques have been released by Richter to LTD employees at the
rate of 18 cents on the dollar of the claims.
DYLEX PENSION PLANS
On November 8, 2001, the Financial Services Commission of Ontario appointed an
administrator to complete the wind-up of the Dylex pension plans. The
administrator is the former actuary for the pension plans (Aon Consulting
Inc.). If you have questions about the pension plans, please contact Karen
Mitchell at Aon directly at 416-542-5585 or by email at
karen.mitchell@aon.ca. Your pension benefits are secure, do not form
part of the estate of Dylex and are protected from other creditors claims
against Dylex.
CLASS ACTION BY MANAGERS AGAINST GREAT AMERICAN GROUP
On, January 23, 2002, we filed a class action lawsuit on behalf of the Managers
and Assistant Managers against Great American Group ("GAG") for payment of the
bonuses provided by GAG. The representative plaintiff was Thomas Englefield,
the former Manager of a Biway store. Prior to Dylex becoming bankrupt, Managers
and Assistant Managers of BiWay stores signed bonus contracts with GAG during
the BiWay liquidation sales that promised bonuses if certain sales targets were
achieved. The targets were achieved but GAG did not pay the bonuses. After
lengthy negotiations, the class action was settled with GAG agreeing to pay the
bonuses and paying a contribution to the Managers' and Assistant Managers'
legal costs. To view a copy of the Statement of Claim, please
click here.
On September 25, 2002, we attended in court before Mr. Justice Cullity who
certified the action as a class proceeding under the Class Proceedings Act, 1992
and also approved the settlement. We sent each Manager and Assistant Manager a
Notice of Certification of Class Proceeding and Court Approval of Settlement by
mail. The bonuses cheques were administered by Richter and have been paid to
all Managers and Assistant Managers. This class action is now concluded.
CLASS ACTION BY EMPLOYEES AGAINST HARDOF WOLF
On March 6, 2002, we filed a class action lawsuit on behalf of all terminated
employees of Dylex against the sole remaining director of Dylex at the time of
its bankruptcy, Hardof Wolf. The representative plaintiff of the employees is
again Thomas Englefield, the former manager of a Bi-Way store. The claim seeks
the payment of all amounts owing to the employees who were terminated by Dylex
when Dylex became bankrupt in August 2001. The defendant, Hardof Wolf, has not
responded to the lawsuit at all. To view a copy of the Statement of Claim,
please click here.
Mr. Justice Cullity granted judgment in favour of the employees in the amount
of $286,089.68 representing amounts owing to the employees for wages, vacation
pay, and expense reimbursements only during the time that the defendant Hardof
Wolf was a director of Dylex. His Honour declined to give judgment for termination
and severance pay owing, which is the bulk of the employees' claim. Given a) the
significant recovery obtained in the bankruptcy proceedings, b) the amount of the
judgment is relatively small given that it would be distributed among 3400 employees
even if payment of the judgment were obtained, c) the defendant never responded to
the lawsuit and it is anticipated that enforcing the judgment would be costly and
with no certainty that collection efforts would be successful, we received
instructions from the representative plaintiff to discontinue the class action,
which was approved by Mr. Justice Cullity. This aspect of the Dylex matter is now concluded.
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