Sears Canada gets court approval to liquidate remaining stores
Sears Canada Inc. received court approval to begin liquidating its stores as the insolvent retailer moves to wind up 65 years of business after failing to adapt to changing consumer tastes. The approval was granted by the Ontario Superior Court of Justice, which also extended creditor protection for Sears Canada to Jan. 22. The public liquidation sales are set to end on Jan. 21.
“They were the best positioned retailer to be successful with the advent of e-commerce,” said Sally Seston, managing director of Retail Category Consultants in Burlington, Ontario. “But their distribution centers didn’t keep up with the technological advances and what consumers wanted.”
The Toronto-based chain’s plan to begin selling off its inventory on Oct. 19 was approved by Justice Glenn Hainey in Ontario Superior Court of Justice on Friday. Gordon Brothers Canada ULC, Merchant Retail Solutions ULC, Tiger Capital Group LLC and GA Retail Canada ULC will run the liquidation for most of the stores. The liquidation must be complete by Jan. 21 and about 12,000 employees will lose their jobs.
“I am certainly satisfied with the order given that there is approval of the monitor and no other going concern,” Hainey said Friday at the hearing.
The company was granted an extension on its creditor protection to Jan. 22 in order to complete the liquidation.
The retailer is the latest victim of department-store decline that’s swept North America as shoppers gravitate online. While Sears Canada has dabbled in pop-up stores and e-commerce, its distribution centers aren’t as automated as Amazon.com Inc. or even Canadian peer Hudson’s Bay Co., which last year opened its own robotic facility to accelerate online orders.
An attempt to keep the company running through a deal with Executive Chairman Brandon Stranzl, who stepped away from day-to-day operations to come up with the bid, also failed to convince the company’s creditors it would be a better option than liquidation.
The company can still terminate the liquidation plans by Oct. 18 to pursue any bids that would allow it to continue to operate, with the approval of its lenders, the court and the court-appointed monitor, FTI Consulting, according to the court order.
But it would have to pay break fees of C$2.5 million and expenses of C$2.05 million to the agents appointed to carry out the liquidations, the order said.