Another party has stepped forward for a possible bid for beleaguered Sears Canada, while the legal wranglings around the company’s bankruptcy protections continue.
Sears Canada executive chairman Brandon Stranzl stepped down on Wednesday in order to prepare a bid for the company.
“In light of the approaching bid deadline and the focus required to assemble all necessary components of a bid, the Board thought it was best for Brandon to focus exclusively on putting the bid together and step away from the day-to-day operations of Sears Canada,” said a memo that was circulated to the staff and acquired by CBC News.
No additional details were provided.
Citing liquidity problems and issues stemming from legacy business units, Sears Canada filed for and was granted bankruptcy protection in June under Canada’s Companies’ Creditors Arrangement Act. It also announced the closing of several locations and the termination of nearly 3,000 jobs. The retailer is attempting to restructure and re-emerge as a going concern by year’s end.
It has been juggling a slate of would-be purchasers, including ESL Partners chairman and CEO of Sears Holdings Edward Lampert. ESL had partnered up with Fairholme Capital to explore the possibility of a joint venture, but that idea fell apart late last month.
Meanwhile, Sears Canada could take another hit if a group of creditors gets its way. A group of suppliers and construction companies have joined forces to try to gain the right to sue the retailer’s executive officers and directors, claiming “negligent misrepresentation and oppression,” according to court documents. Sears Canada is currently protected from such claims under Canada’s bankruptcy laws but the group is pressing for a hearing which would determine if they can move forward.
In an attempt to resolve a battle on another front, the Canadian retailer has set up a $500,000 hardship fund for employees laid off as part of the restructuring. The money was taken from bonuses the company had planned to use to retain key employees. A separate hearing, expected to take place today, is necessary to approve the plan.