An announcement by Sears Canada Inc. about its intention to close many stores in Alberta and other provinces may have an impact on mall owners across the country. Nevertheless, it will create opportunities for other business owners who are looking for premises in sought-after locations. However, the legalities of commercial real estate transactions -- both leases and purchases -- can be challenging if tackled without legal counsel.
After their application for temporary court protection, Sears received creditor protection under the Companies' Creditors Arrangement Act. The company has announced the closure of almost 60 of its business enterprises nationwide. These include two Home stores, seven Hometown stores and four full-line Sears department stores in Alberta.
Reportedly, Sears Inc. stocks have plummeted over recent months, showing a loss of over 80 per cent in the last year. Efforts were made to bring about changes by reinventing and updating some stores, which showed positive results. However, the ongoing liquidity pressures and other limitations have halted the process. Although the closures seem ominous, the company is not admitting defeat and says it hopes to exit creditor protection later this year.
In the meantime, business owners in Alberta may be vying for vacated Sears premises. Although securing a spot in a sought-after location may be tempting, it might be best not to rush into signing a lease. Getting an experienced commercial real estate lawyer involved early in the process can be a valuable asset. He or she will be the legal eyes and ears of the business owner and scour the details of every transaction to detect ambiguous or improper wording that may fall short of protecting the interests of the client.
Source: edmontonjournal.com, "Sears Canada restructuring closes 13 stores in Alberta", Dustin Cook, June 23, 2017