TORONTO - Sears Canada on Wednesday won court approval to extend credit protection by a month to Nov. 7, but its creditors set a deadline of this week to liquidate the retailers' assets, leaving the company with mere days to decide its fate.
While the extension of creditor protection will keep its lenders at bay a bit longer, the new liquidation deadline means a deal with Executive Chairman Brandon Stranzl that would allow it to remain in business would still need to be reached by Saturday, Oct. 7.
Stranzl, who stepped away from Sears Canada's day-to-day operations to keep the 65-year-old company running, made a revised bid on Tuesday, his legal team said, after the court-appointed monitor FTI Consulting said his earlier offer presented "significant closing risk and uncertain recovery."
FTI Consulting is examining Stranzl's revised bid, the monitor's lawyers said on Wednesday.
Reuters was not immediately able to reach Stranzl for comment.
A lawyer for Sears Canada and a company spokesman both declined to comment.
The lenders are pushing for an early liquidation as the assets would fetch more from potential buyers who would be able to operate the stores during the busy holiday season, according to people familiar with the court proceedings but who were not authorized to speak publicly about the matter.
FTI Consulting earlier this week said Sears Canada would be better off liquidating its assets than pursuing Stranzl's earlier bid. Under that proposal, unsecured creditors would get less than they would from individual sales of its assets, it said.
Sears Canada, which in 2012 was spun off from U.S. retailer Sears Holdings Corp, filed for creditor protection in June and laid out a restructuring plan that included cutting 2,900 jobs and closing roughly a quarter of its stores.
The company has steadily lost market share and struggled to remain relevant to shoppers who have switched to stores that keep up with fast-changing fashion trends. Sears Canada's sales have fallen every quarter since it was spun off from Sears Holdings in 2012.
Along with extending the company's credit protection, which had been set to end on Wednesday, the Ontario Superior Court of Justice also approved the closure of 11 stores as well as the sale of some of its businesses.
Sears Canada is required by its creditors to enter into agreements to liquidate the rest of its assets by Oct. 7 to receive payments to ease its growing liquidity crunch, according to the latest amendment to an agreement between the company and creditors.
Liquidation is a court-based procedure under which the assets of a company are sold and the funds distributed to the company's creditors.
The company must receive court approval of the liquidation agreements by Oct. 13 and begin the sale process by Oct. 19 according to the amendment posted on the website late Tuesday. The deadline for the sales can be extended to Oct. 26, the document said.
-- With files from BNN