Sears closing Laval home centre, Place Vertu outlet in restructuring
|Montreal Gazette 23 Jun 2017 at 07:48|
The retailer is aiming to exit court proceedings as soon as possible this year, Sears Canada said in a statement Thursday. An order was granted by the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act, known as the CCAA, which allows it to stay in business while a recovery plan is worked out, according to a separate statement.
The court order allowed Sears Canada to obtain debtor-in-possession financing of $450 million, according to the company, which also said it’s closing 20 full-line locations and 15 Sears Home Stores, 10 Sears Outlet and 14 Sears Hometown locations. About 2,900 jobs will be cut from the retail network and at the corporate head office in Toronto, Sears Canada said.
In Quebec, Sears Canada is closing 14 stores, including an outlet in Montreal’s Place Vertu shopping centre and Sears Home Centres in Laval and St-Bruno.
The filing will likely lead to a liquidation, with the business sold off in pieces, Bloomberg previously reported.
The move represents the most high-profile setback yet to the Sears retail empire overseen by billionaire hedge fund manager Eddie Lampert. Together with Sears Holdings, Lampert controlled the majority of shares in Sears Canada, a business that was once seen as a bright spot. But Canadians are increasingly shopping online, and department store traffic has suffered. The company also has had to contend with local competitors, such as Canadian Tire Corp. and Hudson’s Bay Co.
“Continued liquidity pressures facing the company as well as legacy components of its business are preventing it from making further progress and from restructuring its legacy assets and businesses outside of a CCAA proceeding,” Sears Canada said in the statement. A spokesman didn’t immediately respond to a message seeking further comment.
Target Corp.’s Canada operations sought CCAA protection in 2015, less than two years after the Minneapolis-based chain first opened stores in Canada, putting an end to a mismanaged expansion that racked up billions in losses. Wal-Mart Stores Inc. and Costco Wholesale Corp. suffered missteps entering Canada as well, though they remain in the country.
The retailer’s plight worsened after it attempted to borrow as much as US$175 million, using its real estate as collateral. After negotiations with lenders faltered, the company said last week that it only expected to get US$109 million before transaction fees. With few other quick sources of cash available, the conditions “raise significant doubt as to the company’s ability to continue as a going concern,” it said at the time.
The U.S. company remains in a dire state as well. Once the biggest American retailer, Sears has been shuttering stores amid a broader department store slump. Lampert, who is chairman, chief executive officer and the largest shareholder, has injected more than $1 billion to bolster the company.
By Lauren Coleman-Lochner, Scott Deveau and Emma Orr