Sears Holdings’ stock dropped after its Canadian counterpart announced it will shut down. Sears Canada, which has been operating creditor protection since June, announced on Tuesday evening that it will be applying to the Ontario Superior Court of Justice for approval to liquidate all of its remaining stores and assets.

“It is expected the Court will hear the motion on October 13, 2017. Pending approval of the Court, ” said the company in a statement. U.S.-based Sears Holdings owns about 10% of Sears Canada, but operates separately.

The Canadian retailer filed for creditor protection in June and outlined a restructuring plan that included thousands of job cuts and store closings. Just last week, Sears Canada won court approval to close 11 stores and sell some businesses, and to extend creditor protection to November 7. In August, Brandon Stranzl, the executive chairman of Sears Canada stepped down in order to head up a bid to buy the company. In July, Stranzl told employees that he, along with other investors, was preparing a bid for the company.

No viable transaction

Sears Canada, which has been laboring under almost a billion dollars of debt, failed to materialize a “viable” transaction. “Sears Canada received and implemented going concern transactions for various lines of business, but following exhaustive efforts, no viable transaction for the company to continue as a going concern was received. Accordingly, Sears Canada, with the recommendation of its advisors and approval of the Monitor, FTI Consulting Inc., is seeking an order to commence a liquidation that would result in a wind-down of its business following Court approval. The company deeply regrets this pending outcome and the resulting loss of jobs and store closures,” said the retailer in a statement on Tuesday evening.

Price action

Shares of Sears Holdings are down 6.4% to $6.27 per share in midday trading.

 

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