Sears Canada and certain of its subsidiaries have been granted an order from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA), the Canadian equivalent of U.S. Chapter 11 filings.

Among other things, the initial order provides for a stay of proceedings in favor of the Sears Canada Group for an initial period of 30 days, subject to extension thereafter as the court deems appropriate, and the appointment of FTI Consulting Canada as Monitor in the CCAA proceedings.

The initial order also authorizes the Sears Canada Group to obtain debtor-in-possession financing in the aggregate principal amount of C$450 million ($340 million) from the company’s existing ABL lenders, with Wells Fargo Capital Finance acting as administrative agent and the company’s existing term loan lenders, with GACP Finance acting as administrative agent.

The DIP Financing is expected to provide the Sears Canada Group with sufficient liquidity to maintain business operations throughout the CCAA proceedings. The Sears Canada Group will work to complete its restructuring in a timely fashion and hopes to exit CCAA protection as soon as possible in 2017, better positioned to capitalize on the opportunities that exist in the Canadian retail marketplace.

The company will close 20 full-line locations, plus 15 “Sears Home” Stores, 10 “Sears Outlet” and 14 “Sears Hometown” locations and plans a reduction in its workforce of approximately 2,900 positions across its retail network and at its corporate head office in Toronto.

Sears Canada has retained BMO Capital Markets as financial advisor, and Osler, Hoskin & Harcourt as legal advisor. The board of directors and the special committee of the board of directors of the company has retained Bennett Jones as legal advisor.

Sears Canada has been engaged in a reinvention of the company over the last 18 months. Sears Canada rebuilt its front and back-end technology platform, redefined its brand positioning, revamped its product assortment and rebooted its customer experience and service standards. These changes led to the company reporting an increase in same-store sales in its two most recently completed quarters. However, the continued liquidity pressures facing the company as well as legacy components of its business are preventing it from making further progress in its brand reinvention efforts and from restructuring its legacy assets and businesses, which is why it sought creditor protection under the CCAA.

Sears Canada is an independent Canadian digital and store-based retailer and technology company whose head office is based in Toronto.