Sears Canada creditor process biased toward sale, says former exec
The Canadian Press
Published Monday, October 30, 2017 1:03PM EDT
Last Updated Monday, October 30, 2017 5:02PM EDT
TORONTO -- Sears Canada's former executive chairman defended his plan to turn around the embattled retailer, and said his bid to buy the company and save it from liquidation was hampered by a creditor protection process biased towards liquidation.
Brandon Stranzl, speaking publicly for the first time since the retailer began a full liquidation of its remaining stores earlier this month, told reporters the creditor protection process which Sears Canada entered in June was structured as a sale rather than a rehabilitation from the beginning.
"Everybody wanted there to be a going-concern solution that saved the jobs, but there were many obstacles and many rules that seemed to be in place to get in the way," Stranzl said during a press conference on Monday.
Stranzl stepped away from his role in August and had been in weeks-long discussions with the embattled retailer to buy it and continue to operate it. However, no deal was reached.
Sears Canada began liquidation sales at its roughly 130 remaining stores across the country on Oct. 19. The retailer got the green light from an Ontario court to proceed with its full liquidation earlier this month as it moves towards putting another 12,000 employees out of work.
Stranzl's comments on Monday also came after Eddie Lampert, the chairman and chief executive of Sears Holding Corp., blamed Sears Canada for exacerbating its problems before it filed for creditor protection.
Lampert, whose ESL Investments is the largest shareholder of Sears Canada, said in a blog post last week that the retailer's reinvention strategy was "untested" and a "less risky strategy... could have avoided the unfortunate conclusion."
He added that ESL was not informed in advance that Sears Canada was seeking protection under the Companies' Creditors Arrangement Act, and was "extremely unhappy" with the decision.
"ESL's decision not to participate in a going concern bid by the former CEO of the Company was based on both the improbability of a going concern bid being accepted and the lack of confidence in the go-forward strategy, which did not represent a change from the approach that resulted in the Company's insolvency," Lampert wrote.
When asked about Lampert's comments, Stranzl said he was "confused" as ESL was kept informed during the process. He also said his turnaround plan for Sears Canada was "well-reasoned" but noted the company had enormous legacy costs, and the company ran out of time and resources.
Stranzl added the CCAA was structured in an "unusual" way in part because the retailer had large operating losses, and pitting a going-concern solution against liquidation from the outset skewed the discussion.
Stranzl, who resigned from Sears Canada's board of directors on Oct. 16, says he is saddened for the thousands of employees who have or will lose their jobs.
"It has left a very large hole and wound in my own heart, and I feel very deeply for these people," he said. "And I spent a lot of time on this business... and so to have this be the end has been very difficult."