TORONTO, Oct 4 (Reuters) - Creditors to Sears Canada have set a deadline of Oct. 7 for the retail chain to enter liquidation agreements for all its assets, leaving the company with just days to reach a deal to continue operations, a court-appointed monitor said.
That tight deadline presents a challenge and could potentially derail negotiations with the executive chairman Brandon Stranzl, who stepped away from day-to-day operations of Sears Canada to come up with a proposal to keep the 65-year-old company running.
A lawyer for Sears Canada and a company spokesman both declined to comment.
Stranzl submitted a revised proposal, lawyers for Stranzl said. Reuters was not able to reach Stranzl immediately.
Stranzl’s bid presents “significant closing risk and uncertain recovery,” FTI consulting the court-appointed monitor said in a report on its website this week.
Sears Canada has steadily lost market 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..
Sears must agree to liquidate all its assets by Oct. 7 to receive payments from its creditors to ease a growing liquidity crunch, according to the latest amendment to an agreement between the company and its 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, 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 must seek court approval on the liquidation agreements on Oct. 13 and begin the process on Oct. 19 according to the amendment posted on the website on Tuesday night.
On Wednesday, the company won court approval to close 11 stores and extend creditor protection, which was to end on Wednesday, until November 7. (Reporting by Nichola Saminather and Solarina Ho; Editing by Andrew Hay)