Sears Canada Inc. is moving toward getting court approval for liquidating its business by Oct. 13 as a revised bid this week from its executive chairman to save the insolvent retailer continues to face hurdles.

The latest offer by a management group led by executive chairman Brandon Stranzl to buy Sears and keep it running fails to provide creditors with a better recovery than selling the retailer’s assets separately to others, a source familiar with the insolvency process said about a preliminary analysis of the Stranzl bid.

Advisers have come to an early, though not final, conclusion that the latest Stranzl bid, which was submitted late Tuesday, “is not a very good offer,” although it responds to previous concerns Sears had that the earlier bids were too conditional, the source said, adding that Sears and its advisers are still assessing the offer.

The success of the Stranzl bid will determine whether Sears continues to operate – saving thousands of jobs – or begins a process by Oct. 13 that will result in liquidation sales starting as early as Oct. 19 in the almost 100 remaining Sears stores.

Sears, which won court protection from its creditors in June, is feeling the pressure of its debtor-in-possession lenders, led by Wells Fargo Capital Finance Corp., to liquidate Sears as soon as possible to cash in on preholiday shopping and collect as much money as possible for debt holders.

Wells Fargo lawyer Joseph Latham at Goodmans LLP told the court on Wednesday that if a satisfactory Stranzl going-concern bid doesn’t materialize “in the appropriate time frame,” it would be to the benefit of the DIP lenders and other creditors “to liquidate it before the Christmas season is over.”

Creditors, including former and current employees, suppliers and landlords, “don’t want to risk recoveries” but rather are “interested in ensuring this does not slip,” Mr. Latham said about the potential gains from quickly liquidating what is left of Sears.

FTI Consulting Canada Inc., the court-appointed monitor overseeing the Sears insolvency, said in a report this week that liquidating Sears and selling it off in pieces would generate more money for creditors than the initial Stranzl bid to keep the retailer as a going concern.

Susan Ursel, a lawyer at Ursel Phillips Fellows Hopkinson LLP, which represents former and current employees, said they would like to see the Stranzl bid succeed but also want to ensure the best solution is chosen as soon as possible.

“We cannot continue to keep funding this exercise,” added Mark Zigler, a lawyer at Koskie Minsky LLP, which represents Sears pensioners.

The latest Stranzl bid would keep about 60 stores operating and be financed by asset-based lenders, including Blackstone Group, as well as Vadim Perelman, founder of Baker Street Capital Management of Los Angeles, sources have said.

Sears now is weighing the need to try to save jobs against the need to find the best recovery for debt holders, a source said.

As Sears’ special committee of its board of directors assesses the latest Stranzl bid, the retailer is also preparing a plan to liquidate the remaining Sears operations, the monitor said in a report.

It said Sears must come up with a liquidation proposal on Oct. 7 that can be approved by the court by Oct. 13, according to terms of its latest DIP lending agreement.

The court on Wednesday approved Sears deals to sell a host of its assets, including 11 leases of its best stores – which Mr. Stranzl’s had coveted in his initial bid — a distribution centre in Calgary, the Corbeil appliance chain, its transport business and three home improvement services firms. The court also extended Sears’s protection from creditors until Nov. 7.

The Globe and Mail, October 5, 2017