Sears Canada stocks dive after report that it will seek court protection

Click to play video: 'Can Sears be saved?' Can Sears be saved?
WATCH ABOVE: Can Sears be saved? – Jun 14, 2017

TORONTO – Sears Canada‘s stock plunged Wednesday morning following a report that it’s preparing to seek court protection from creditors.

The shares (TSX:SCC) fell 21.25 per cent, or 17 cents, to 63 cents on the Toronto Stock Exchange shortly after the market opened Wednesday.

The stock has been on a nosedive in the last year – losing more than 80 per cent of its value – and just last week the company warned there was “significant doubt” about its future and that it could be sold or restructured.

Sears Canada didn’t immediately respond for comment.

READ MORE: First Target, now Sears? Why retail jobs will keep disappearing

Bloomberg, citing unnamed people it said were familiar with the matter, reported that the company is preparing to seek court protection from creditors within weeks and that the business could be sold off in pieces.

Story continues below advertisement

The Toronto-based retailer and its American counterpart have been suffering from dwindling sales for years as a result of changes to consumer buying patterns and new competition, particularly from online shopping.

In April, Sears Canada announced that its 2016-17 loss was $321 million.

Shareholders rank after lenders and creditors in a court-supervised bankruptcy proceeding, so Sears Canada shares could lose most or all of their value if it files under the Companies Creditors Arrangement Act or Bankruptcy and Insolvency Act.

WATCH: Leases available for former sears warehouse

Click to play video: 'Leases available for former sears warehouse' Leases available for former sears warehouse
Leases available for former sears warehouse – Jun 7, 2017

According to regulatory documents, its biggest direct and indirect shareholder is billionaire Edward S. Lampert, who also controls the Sears Holding Corp. – a public company that owns Sears and Kmart stores in the United States.

Story continues below advertisement

Shares of Sears Holdings, which retains a minority stake in the Canadian operation, are down more than eight per cent Wednesday morning on the Nasdaq.

Efforts to reach hedge fund ESL Investments Inc. and Sears Holdings for comment were not immediately successful Wednesday.

Sponsored content