Outgoing Sears Canada chairman 'fronting for Eddie Lampert': Former CEO
TORONTO -- Lawyers representing Sears employees and pensioners argued Tuesday that a Toronto judge should allow a last-minute bid from one of Canada's largest retail space owners to purchase a Sears store in Winnipeg, even though the insolvent retailer already has a deal in place with another buyer.
The court will decide by Friday whether to allow RioCan Real Estate Investment Trust (REI_u.TO) to bid for the Sears Outlet store location in the Garden City Shopping Centre.
RioCan made its bid after Sears had already accepted a $5 million offer for the property from WCRE Investments Ltd.
Lawyers representing employees argue that RioCan's offer for $1 million more should be allowed to proceed because it would give more money to creditors, which include former employees.
"My employee group is owed millions in severance and termination payments," Susan Ursel, the lawyer representing the employees told the court.
"There's money on the table and they don't want to leave it there."
Lawyers for Sears and the court-appointed monitor said the location had been marketed widely and that RioCan, which owns the majority of stores in that mall, had been specifically asked if it was interested before the company reached the deal with WCRE.
Counsel for RioCan said the real estate investment trust was not given enough time to conduct due diligence and put an offer together, and thought it had until Aug. 31 to decide.
A lawyer for Sears said that allowing the RioCan offer to proceed would re-open the bidding process and make other potential bidders think twice before making an offer.
Sears is selling the Winnipeg property because it cannot afford to maintain the location. The store had been operating at a loss of over $1 million per year.
Tuesday's development was the latest in the ongoing Sears bankruptcy saga. It is currently restructuring after announcing it would lay off 3,100 employees and shutting down 59 stores in Canada.
Last week, a judge approved a $500,000 fund for employees facing financial hardship, with money coming from a pool set aside to pay bonuses for executives.
The department store chain has come under fire for forgoing retirement benefits or severance pay for former employees, while paying $9.2 million in bonuses to keep key employees on board while under the Companies' Creditors Arrangement Act.
Once a go-to department store famous for its catalogues, Sears Canada has recently despite efforts to change as consumers shift away from bricks and mortar stores toward online purchases.
The company has also dealt with several changes in executive leadership over the last four years.