Sears Canada Inc will seek court approval to liquidate all its remaining stores and assets after the 65-year-old retail chain failed to reach an agreement to continue to operate.
Sears Canada has lost market share and struggled to remain relevant to shoppers who have switched to stores that keep up with fast-changing fashion trends. Its sales have fallen every quarter since it was spun off from Sears Holdings Corp in 2012.
The company had been in negotiations with Executive Chairman Brandon Stranzl, who stepped away from day-to-day operations to come up with a proposal to keep the company afloat.
But the company received no viable transaction to keep it in business, it said in a statement on Tuesday.
Therefore, “Sears Canada, with the recommendation of its advisors and approval of the (court-appointed) monitor, FTI Consulting Inc, is seeking an order to commence a liquidation that would result in a wind-down of its business following Court approval,” the Toronto-based company said.
The Ontario Superior Court of Justice is expected to hear the motion to liquidate on Friday, the company said, and it expects liquidation sales to begin on about October 19 and continue for 10 to 14 weeks.
It filed for creditor protection in June and laid out a restructuring plan that included cutting 2,900 jobs and closing roughly a quarter of its stores.
The company last week won court approval to close 11 stores and sell some businesses, and to extend creditor protection to November 7.
But its lenders required it to enter into liquidation agreements for the rest of its assets by October 7, agreeing with FTI Consulting Inc that they would recover more through liquidation than a deal to keep it operating.
Update: The Wall Street Journal reported last month that Brandon Stranzl was negotiating a private-equity backed deal that could be valued at more than $650 million (US$533 million).
Sears Canada’s top shareholders are ESL Partners, a U.S. hedge fund run by Eddie Lampert, and Fairholme Capital Management.
(Reporting by Nichola Saminather in Toronto, Ahmed Farhatha in Bengaluru; editing by Bernard Orr and Susan Thomas)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of yelo34/iStock/GettyImages