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Jun 29, 2017

Commercial bankruptcy may be on the books for Sears Canada

Another household name in retail seems to have lost the battle between brick and mortar vs. online enterprise. Sears Canada has applied to the Ontario Superior Court of Justice to grant it creditor protection. If this application is successful, the commercial bankruptcy might be avoided while the business is restructured.

It is ironic that a company that started as a mail-order operation in 1952 is now threatened by the modern version called online shopping. Sears says its losses on the stock market exceeded 80 percent in the most recent year and that it had experienced multiple changes in leadership over the past few years. Company officials announced that they doubt the future of Sears and expect that it might be sold if the restructuring fails.

The Companies' Creditors Arrangement Act might provide Sears reprieve, although the aimed brand reinvention program is a long-term attempt. This federal law provides businesses with an opportunity to continue operations under the supervision of the court while working with landlords, bondholders and creditors to reach payment agreements. The company intends to complete the restructuring process later this year -- if allowed by the court.

Sears Canada has its headquarters in Ontario, with more than a hundred branches of department stores, home stores and other outlets nationwide. If the ultimate outcome is a commercial bankruptcy and Sears decides to close its stores, it could also have a severe impact on malls across the country. However, these are only speculations as the company works with its business lawyers to seek the most appropriate way to proceed.