Sears Canada is closing 59 stores and laying off 2,900 employees under a court-supervised restructuring.
The company is closing 20 full-line department stores, 15 home stores, 10 outlet stores and 14 Hometown locations.
Sears announced the closures on Thursday after it was granted court protection from its creditors.
The closures represent about a quarter of the stores that the company operates in Canada under the Sears and Corbeil banners.
Sears Canada said Thursday that it has made progress toward reinventing its brand, but is running out of cash and needs more time to turn business around.
“The brand reinvention work Sears Canada has begun requires a long-term effort, 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,” the company said in a statement.
The company was spun off in 2012 from Sears Holdings, which owns Sears’ US business.
Sears Holdings still holds 12% of the Canadian business’s stock. Billionaire Eddie Lampert, the CEO of Sears Holdings, owns 45% of Sears Canada’s shares.
Sears Canada said earlier this month that it had “significant doubt” about its ability to stay in business, and was looking at a possible restructuring or sale.
The company said its forecasted cash flows from operations would not be enough to cover its obligations coming due over the next year.
Sears Canada had expected to be able to borrow up to $ 175 million to pay off its debts, but has only been able to negotiate an amount of up to $ 109 million.
“Accordingly, such conditions raise significant doubt as to the company’s ability to continue as a going concern,” the company said.
“Going concern” refers to a company’s ability to stay in business.
It’s the same admission that Sears Holdings made in a filing in March about its US business.
Sears Canada said it has hired BMO Capital Markets as its financial adviser and Osler, Hoskin & Harcourt LLP as its legal adviser as it struggles to meet its financial obligations.