The Sears Canada bankruptcy and planned sale has sparked a flurry of legal motions from shareholders, property owners and employees.
Last week, the retailer secured approval to sell the company by an Ontario judge, with the bidding process expected to last until October 25th.
This latest development follows the department store’s bankruptcy filing last month, which was granted under Canada’s Companies’ Creditors Arrangement Act. As a part of its attempt to restructure, the retailer announced it would close 20-full-line stores, 15 Sears Home locations, 10 Sears Outlets, and 14 Sears Hometowns and cut 2,900 jobs.
[See an updated list of apparel retail bankruptcies to date: Infographic: The Accelerating Pace of Apparel Retail Bankruptcies]
FTI Consulting, the retailer’s court-approved monitor, said more than 20 parties have expressed interest in a deal for the retailer.
Among them are U.S.-based Sears Holdings CEO Edward Lampert’s ESL Partners LP and Fairholme Capital Management, which together own about two-thirds of Sears Canada stock. The two entities filed court papers last week requesting access to several internal documents related to the restructuring, including the key employee retention and store closing plans.
The filing also requests that “conflicted” members of the Sears Canada management team be excluded from selecting successful sale bids.
Reuters reports that Oxford Properties and OPGI Management Limited Partnership have filed a separate court document regarding concerns about the sale process which could affect property rights, as Sears Canada owns property that is part of Oxford’s Upper Canada Mall.
As a part of the creditor protection, Sears Canada also sought to terminate pension and health benefits for laid-off employees and retirees. It has since decided to continue payments to retirees through September 30th. Laid off employees are not receiving severance, benefits or pension, a fact that is being disputed by affected workers, according to CBC News.
Sears Canada has also filed to gain clearance for liquidation sales, which are to begin by July 21st and wrap up by October 12th. That motion is scheduled to be heard tomorrow.
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