Sears Canada full liquidation approved
After weeks of discussion there is no viable buyer for the 65-year-old chain
TORONTO — Sears Canada has received court approval to proceed with a full liquidation of its remaining stores, signalling the end of an era for a 65-year-old chain that was once a staple at malls across the country.
Ontario Superior Court heard Friday that after weeks of discussion and a bid from the company’s executive chair, no viable buyer has been found. The move will put 12,000 of its employees out of a job.
The closings include the outlet in Fairview Park mall in Kitchener that employs 154 people. The Sears outlet store in the Cambridge Centre, with 10 full-time and 63 part-time employees, already has closed.
Justice Glenn Hainey approved Sears Canada’s motion to liquidate its remaining 130 stores, and said he was satisfied that there was no viable alternative following a months-long saga stemming from the embattled retailer’s decision to seek protection from its creditors in June.
Liquidation could start as early as Oct. 19, and could continue for 10 to 14 week, stretching closing sales across the busy holiday shopping period.
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 chair 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.
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.
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, the court heard.
Susan Ursel, a lawyer representing current and former employees, told Justice Hainey Friday that they will continue to support discussions toward a potential transaction.
“This company has touched the lives of generations of Canadians,” she told the court.
“For employees and their families, it has been a source of livelihood, community, camaraderie and pride.
“That we’ve come to this juncture is a source of frustration, anger in some corners, and apprehension for many.”
Litigators for a group of lenders who have provided debtor-in-possession financing to Sears Canada to keep it afloat had pushed to enter into a liquidation agreement by Oct. 7 at the latest.
The lenders wanted approval no later than Oct. 13, in order to liquidate before the crucial holiday season and maximize value.
Sears Canada has 74 full department store locations, eight Sears Home Stores, and 49 Sears Hometown stores, facing closure. It has approximately 12,000 employees, three-quarters of which are parttime.
That tally doesn’t include the 2,900 job cuts Sears Canada previously announced in June, when it announced the closure of 20 department store locations, 15 Sears Home stores, 10 Sears Outlet and 14 Sears Hometown locations.
Sears Canada was spun off from U.S.-based Sears Holdings in 2012.