Sears Canada announces sale and investment process, payment suspension

By Caroline Salls

Pittsburgh, July 6 – Sears Canada Inc. announced Thursday that the Sears Canada Group filed motions with the Ontario Superior Court of Justice regarding orders it intends to seek in support of its restructuring efforts under the Companies’ Creditors Arrangement Act at a hearing scheduled for July 13, including seeking approval of a sale and investment solicitation process (SISP).

According to a company news release, the SISP will be conducted by financial adviser BMO Capital markets under the supervision of Sears Canada court-appointed monitor FTI Consulting Canada Inc. and a special committee of the company’s board of directors.

Sears Canada said the purpose of the SISP is to seek out proposals for the acquisition of, or investment in, the group’s business, assets and/or leases, and to implement one or a combination of proposals.

The deadline for the group to obtain court approval of successful bids is Oct. 4, and all transactions are expected to be completed by Oct. 25.

The Sears Canada Group said it intends to seek an extension of its CCAA stay period through Oct. 4 to allow the group’s businesses to keep operating while the SISP is implemented.

In addition, the company said cash constraints at the Sears Canada Group have resulted in challenges for a number of stakeholders, including associates whose positions were recently eliminated or will be eliminated when a number of Sears Canada locations across the country close, as well as retirees, suppliers and landlords.

Sears Canada previously announced that it is not able to make payments to some stakeholders.

As a result, the group said it will seek court approval to suspend payments, including special payments toward the defined benefit component of the Sears Registered Retirement Plan, which amount to roughly $3.7 million per month; post-retirement health and dental benefit payments, with an average cost of $800,000 per month, plus tax; and post-retirement life insurance premiums, which total about $245,000 per month, plus tax.

Sears Canada is a multi-channel retailer based in Toronto.

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