Sears Canada seeks creditor protection to continue its restructuring plan

TORONTO — Sears Canada Inc. has announced that Sears Canada and certain of its subsidiaries (the Sears Canada Group) have applied to the Ontario Superior Court of Justice for protection under the Companies' Creditors Arrangement Act in order to continue to restructure its business.

Reuters reported that trading in the U.S.-listed shares of Sears Canada was halted on Thursday pending the news.

Over the past 18 months, Sears Canada has implemented a reinvention plan to rebuild its front and back-end technology platform, redefine its brand positioning, revamp its product assortment and reboot its customer experience and service standards.

According to a statement by Sears Canada Inc., the reinvention plan has resulted in growth of same-store sales in the past two quarters. “The brand reinvention work Sears Canada has begun requires a long-term effort, but the 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,” the company said.

If the creditor protection is granted, the company plans to continue its restructuring and hopes to exit the CCAA protection this year.

In its earnings statement released last week, Sears Canada reported significant declines and liquidity issues, adding “the ability of the company to continue as a going concern is dependent on the company's ability to obtain additional sources of liquidity in order to implement its business plan.”

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