Sears has had its fair share of problems in the U.S. over the past decade, but the retailer’s Canadian counterpart actually has had it much worse. Sears Canada is officially shutting down its operations and liquidating its assets, pending approval from the Ontario Superior Court.
Nearly 12,000 Sears Canada employees are anticipated to lose their jobs as a result of the shutdown, which includes the closing of approximately 130 stores and an e-Commerce site. Additionally, 18,000 retirees of Sears Canada may be facing cuts to their pension payments.
Sears Canada Executive Chairman Brandon Stranzl led a management group of private equity partners in a last-ditch effort to buy out the retailer and keep some stores afloat, but that attempt failed.
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“Following exhaustive efforts, no viable transaction for the company to continue as a going concern was received,” a company statement revealed.
The court overseeing Sears Canada’s operations is set to hear a motion on Oct. 13 seeking approval for the liquidation and wind-down of the business. If approved, liquidation sales at stores are scheduled to begin Oct. 19, continuing for 10 to 14 weeks.
Sears Canada, which operates independently from Sears Holdings, has been under creditor protection since filing for bankruptcy on June 22, 2017. At that time, Sears Canada announced it was closing 59 stores and intended to restructure.
But the writing had been on the wall for some time. In the last five fiscal years, the retailer suffered recurring operating losses and negative cash flows.
In its Q1 earnings report in June 2017, the company reported that “cash and forecasted cash flows from operations are not expected to be sufficient to meet obligations coming due over the next 12 months.”
The shutdown will not affect former parts of the Sears business that have been approved for sale. SLH Transport, a stand-alone trucking and logistics company that services Sears Canada, and appliance retailer Corbeil Electrique will continue under new ownership.
Sears Holdings had majority ownership over Sears Canada until 2014 before spinning it off, but it still owns a 12% stake in the company. ESL Investments, the hedge fund controlled by Sears CEO Eddie Lampert, owns another 45% of Sears Canada.
