Sears Canada gets go-ahead to liquidate
but it’s also an end of an era, for Canada,” said the 58-year-old Toronto man.
Sears Canada is set to proceed with its proposal to liquidate its remaining roughly 130 stores across the country — putting another 12,000 employees out of work — after getting the green light from Ontario Superior Court on Friday.
That tally doesn’t take into account the first round of 59 store closures after the department store retailer asked a court for protection from its creditors in June, when the company laid off 2,900 employees, including Lyle.
Sears Canada had as many as 17,000 employees in June.
In addition to the layoffs, it has also lost some of its workforce to attrition over the past few months, said Susan Ursel, a lawyer representing current and former employees.
The process of liquidating inventory could start as early as Oct. 19, and continue for 10 to 14 weeks, stretching closing sales across the busy holiday shopping period.
Sears Canada currently has 74 full department store locations, eight Sears Home Stores, and 49 Sears Hometown stores, which all face closure.
The impact will be felt particularly in smaller centres, where Sears Canada is often an anchor in the local malls serving those communities.
Justice Glenn Hainey approved Sears Canada’s motion Friday, saying he was satisfied that there was no viable alternative, and extended its creditor protection until January 22 to allow for the liquidation process.
Orestes Pasparakis, a lawyer representing the court-appointed monitor FTI Consulting Canada, said it supported the liquidation because it did not think there was any other option.
“We recognize that today the order will effectively bring Sears Canada’s 65 years as a national retailer to an end,” he told the court. “Many people have worked hard to understand whether there is a viable alternative. It appears that there is not.”
A buyer group led by Sears Canada executive chairman Brandon Stranzl had been in discussions to purchase the retailer and continue to operate it. Stranzl, who stepped away from his role with the company in August to launch a bid, was in the Toronto courtroom on Friday. He did not immediately respond to a request for comment submitted via his lawyer.
Jeremy Dacks, a lawyer for Sears Canada, told the court Friday the company had remained optimistic and many stakeholders worked “tirelessly around the clock,” but ultimately decided liquidation was the best way forward to maximize value for stakeholders.
Details of any potential bids have not been made public as confidential information during the sales process are generally kept secret under the Companies’ Creditors Arrangement Act.
Under the terms of the liquidation agreement, Sears Canada can terminate the agreement if another potential transaction emerges, but will need to pay a break fee and expense reimbursement totalling $4.55 million.
Andrew Hatnay, a lawyer representing Sears pensioners, said his team had been actively engaged in discussion for a potential transaction over the past 10 days.
Despite Friday’s approval, he said outside the court he planned to continue those discussions and “the issue remains on the table.”
He also added that pension benefits will continue without interruption for the time being, and his team expects to assert a claim for the pension deficit to be paid in priority to other creditors.