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 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.
Sears Canada’s liquidation is the latest chapter in its restructuring which began in June with liabilities of C$1.1 billion ($880 million) and a plan to close 59 stores and shed 2,900 jobs. Executive Chairman Brandon Stranzl had tried to cobble together an offer to purchase a portion of the company’s assets and keep them going, but the company said in a Tuesday statement that it was unable to secure a viable bid to keep Sears Canada afloat.
The company’s monitor and restructuring lender said that a liquidation will return more to creditors than the Stranzl bid. A windup could be still be averted if the company and Stranzl come to an agreement that’s approved by the monitor, advisers and lenders before Oct. 19.
Sears Canada’s liquidation is a blow for billionaire Eddie Lampert, its biggest shareholder, who partially spun off the company from Sears Holdings Corp. in 2012. The windup raises questions about whether Sears Holdings may also falter as the company has racked up more than $10 billion in losses over the past six years. Sears shares have fallen more than 10 percent since Sears Canada announced it was going to liquidate.
Target Corp., which filed for creditor protection in Canada and then withdrew from the country in 2015, has left a hole in many of the country’s malls, which made it tougher for Sears Canada to find buyers for its real estate and leases.
Sears Canada must also address its monthly pension obligations to its 18,000 retirees and beneficiaries. A motion was filed in August for a windup of the plan, which would require the company to pay the full C$266.8 million deficit, according to the filing. That motion has been postponed until at least Nov. 30.