Sears Canada warns it’s running out of cash
TORONTO — The court-appointed monitor for Sears Canada is warning that its available funds are running low and there might not be enough time to reach an acceptable deal with a buyer group headed by its executive chairman, Brandon Stranzl.
In its third report to Ontario Superior Court, the monitor said Sears Canada is losing money on a weekly basis but will have enough liquidity to fund operations to Nov. 7 — subject to agreement of its restructuring lenders.
It said the Stranzl group’s initial proposal to buy the business as a going concern would provide unsecured creditors with less than would sales of the Sears Canada assets piece by piece and liquidation of its remaining inventory.
The report, dated Oct. 2, said a lawyer for the Stranzl group has indicated that a revised proposal will be submitted. It also said an extension of court protection until Nov. 7 would provide Sears Canada with more time to decide which major steps to take. The current court protection ends today.
“The Stranzl Group Proposal as currently presented may not be executable within the timeline and liquidity available to [Sears Canada],” the report said.
The monitor supports the company’s request for permission to sell some business assets — notably the Corbeil franchise chain, the SLH Transport operation and the Viking appliance brand.
“The transactions for which the Applicants seek approval at this time are the highest and best offers obtained for each of the subject assets. The monitor supports the Applicants requests for approval of these transactions,” the report said.
It said that Sears Canada isn’t yet asking for permission to begin a second round of store inventory liquidations, as announced last week, but added that it expects the company would return to the court if a “going-concern” transaction can no longer be pursued.
“The monitor, the applicants and their advisers are cognizant of the fact that liquidation sales in the retail industry yield better results if they are completed before and during the lead up to the December holiday season, which also impacts recovery to stakeholders,” the report said.