Sears Canada seeks approval for liquidation plan

After years of attempts at a business turnaround, the retailer appears set to be ending operations for good.
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Sears Canada is seeking court approval for liquidation of its remaining stores, assets and product inventory, bringing an end to the retailer’s efforts to survive.

The move follows efforts undertaken since June, when it received creditor protection, to continue operations. “The Company deeply regrets this pending outcome and the resulting loss of jobs and store closures,” it said in a press release.

The court is expected to hear the motion on Oct. 13. If approved, liquidation sales could begin as early as Oct. 19 and last up to or even into the new year.

Last week, Sears had been seeking an extension of its stay period – which was set to expire on Oct. 4 – until Nov. 7. The company was seeking additional time to continue its restructuring efforts and decide what further steps needed to be taken, including the possibility of accepting a bid from a group of buyers led by Sears Canada executive chairman Brandon Stranzl to buy what was left of the company. The Stranzl group’s plan was to relaunch a slimmed-down version of the company that would still drastically reduce its retail footprint, but still preserve jobs for a portion of the company’s 13,000 employees.

However, the court-appointed monitor for Sears Canada expressed concerns that the plan proposed by Stranzl’s buyer group could not be executed, given the timeline it would need to be executed in and the amount of funds the company had available. The monitor also pointed out that Stranzl’s initial proposal would provide Sears’ creditors with less funds than the sale of the company’s assets and liquidation of its remaining inventory.

Lawyers representing the Stranzl group had said a revised proposal would be coming, but a report from the Wall Street Journal said that Sears Canada board members had rejected his bid over the weekend.

Sears Canada’s press release said further details about the liquidation would be forthcoming, but the WSJ report claimed the accepted proposal from liquidators would see the company sell its remaining assets for $300 million.

Even prior to seeking creditor protection earlier this year, the retailer had been on a cost-cutting spree to help turn around years of operating losses, primarily when it came to reducing its real estate footprint. It had also been dealing with a seeming revolving door among its most senior leadership ranks.

Sears Canada’s efforts to turn around its business seemed to touch nearly every element of its business, be it a new corporate branding, a revamped store design, experiments with the off-price banner and fast fashion trends and an innovation lab that aimed to help modernize its in-store and online shopping experiences, as well as update its own out-of-date systems.