Sears Canada lenders seek liquidation despite extended protection (updated)
04/10/2017 23:20
(Updates with liquidation deadline, context throughout)
By Nichola Saminather
TORONTO, Oct 4 (Reuters) - Sears Canada SRSCQ.PK on
Wednesday won court approval to extend credit protection by a
month to Nov. 7, but its creditors set a deadline of this week
to liquidate the retailers' assets, leaving the company with
mere days to decide its fate.
While the extension of creditor protection will keep its
lenders at bay a bit longer, the new liquidation deadline means
a deal with Executive Chairman Brandon Stranzl that would allow
it to remain in business would still need to be reached by
Saturday, Oct. 7. urn:newsml:reuters.com:*:nL2N1MB0AD
Stranzl, who stepped away from Sears Canada's day-to-day
operations to keep the 65-year-old company running, made a
revised bid on Tuesday, his legal team said, after the
court-appointed monitor FTI Consulting said his earlier offer
presented "significant closing risk and uncertain recovery."
FTI Consulting is examining Stranzl's revised bid, the
monitor's lawyers said on Wednesday.
Reuters was not immediately able to reach Stranzl for
comment.
A lawyer for Sears Canada and a company spokesman both
declined to comment.
The lenders are pushing for an early liquidation as the
assets would fetch more from potential buyers who would be able
to operate the stores during the busy holiday season, according
to people familiar with the court proceedings but who were not
authorized to speak publicly about the matter.
FTI Consulting earlier this week said Sears Canada would be
better off liquidating its assets than pursuing Stranzl's
earlier bid. Under that proposal, unsecured creditors would get
less than they would from individual sales of its assets, it
said.
Sears Canada, which in 2012 was spun off from U.S. retailer
Sears Holdings Corp SHLD.O , 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.
urn:newsml:reuters.com:*:nL3N1JA471
The company has steadily lost market share and struggled to
remain relevant to shoppers who have switched to stores that
keep up with fast-changing fashion trends. Sears Canada's sales
have fallen every quarter since it was spun off from Sears
Holdings in 2012.
Along with extending the company's credit protection, which
had been set to end on Wednesday, the Ontario Superior Court of
Justice also approved the closure of 11 stores as well as the
sale of some of its businesses.
Sears Canada is required by its creditors to enter into
agreements to liquidate the rest of its assets by Oct. 7 to
receive payments to ease its growing liquidity crunch, according
to the latest amendment to an agreement between the company and
creditors.
Liquidation is a court-based procedure under which the
assets of a company are sold and the funds distributed to the
company's creditors.
The company must receive court approval of the liquidation
agreements by Oct. 13 and begin the sale process by Oct. 19
according to the amendment posted on the website late Tuesday.
The deadline for the sales can be extended to Oct. 26, the
document said.
(Reporting by Nichola Saminather; editing by Diane Craft, G
Crosse)
((Nichola.Saminather@thomsonreuters.com; +1-416-687-7604))
Keywords: SEARS CANADA HEARING/