A lot of people have asked me why 8/11ths of the amounts received under the Red Cross settlement will be deducted from the new settlement with the Federal Government.
The reason for the deduction of the Red Cross settlement amount is as follows:
The concept of this Settlement Agreement is to provide pre-86/post-90 claimants with a compensation program which reflects parity with the 86-90 settlement, at least as far as the Federal contribution to the 86-90 settlement is concerned. The Federal Government contributed 8/11ths of the money to the 86-90 settlement, the provinces contributed the rest (3/11ths).
The 86-90 people did not receive anything from the Red Cross. This was a deal worked out with the Federal Government and the Red Cross at the time the Red Cross was under bankruptcy protection. The Federal Government and the 86-90 group both agreed not to assert any claim against the Red Cross so that all of the available money could go to the pre-86/post-90 group. They did this in recognition that the 86-90 group was getting money from the federal government whereas the pre-86/post-90 group was not.
Now that the pre-86/post-90 group is going to receive compensation from the Federal Government, if there was not a deduction the pre-86/post-90 group would end up getting more in total than the 86-90 group got (at least with respect to the contribution by the Federal Government).
I hope that clarifies things.
