TORONTO (AP) — Sears Canada said Thursday it is seeking court protection from its creditors in order to restructure its business.
The retailer, a separate, publicly traded company that was spun off from Sears Holdings in 2012, has piled up losses and seen its stock nosedive, losing more than 80 percent of its value in the last year.
Just last week, the company warned there was "significant doubt" about its future and that it could be sold or restructured. Sears Canada said then that cash and forecast cash flows from operations are not expected to be sufficient to meet its obligations over the next 12 months.
Sears Canada said Thursday it has applied to the Ontario Superior Court of Justice for protection under the Companies' Creditors Arrangement, a Canadian law that gives businesses a chance to operate under court supervision while working out a plan with bondholders, landlords, suppliers and other creditors.
"The brand reinvention work Sears Canada has begun requires a long-term effort," Sears Canada said. "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."
Sears Canada said if the Ontario Superior Court of Justice grants it creditor protection, it will try to complete its restructuring and aim to exit protection as soon as possible this year. Its announcement didn't elaborate on what it expects to do to restructure its business.
Headquartered in Toronto, Sears Canada has 94 department stores, 23 Sears Home stores and 10 outlets.