TORONTO (Reuters) - Sears Canada on Friday won court approval to begin liquidating all its remaining assets starting Oct. 19, putting the retail chain with 12,000 employees on a path to closure after 65 years in the country.
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.
The end comes after years of falling sales and sliding market share for Sears Canada, whose beginnings as a catalog company seemed to make it ideally suited to take advantage of consumers’ shift to online shopping.
“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.”
Weighed down by over C$1.1 billion ($879 million) in liabilities, almost matching its assets, and falling sales every quarter since it was spun off from Sears Holdings Corp in 2012, Sears Canada filed for creditor protection in June. It laid out a restructuring plan that included cutting 2,900 jobs and closing roughly a quarter of its stores.
Last week, it won court approval to close 11 more stores and sell some businesses, and to extend creditor protection to Nov. 7.
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.
Reporting by Nichola Saminather, editing by G Crosse and Richard Chang