Dive Brief:

• Sears Canada, which last month filed for creditor protection in Canada, has received court approval to put itself up for sale, as more than 20 parties have shown interest in buying the department store retailer and/or its assets, according to documents filed Wednesday. 
• FTI Consulting, which is monitoring the bankruptcy process, noted that “a number of stakeholders are concerned as to the potential conflict of interest" around a bid from some executives within the company. FTI added, without elaborating on who the conflicted parties were, that it was working with Sears Canada and its advisors to ensure those conflicts wouldn’t interfere with the “proper conduct” of a sale process.
• Meanwhile, the retailer’s majority shareholders — namely Eddie Lampert (Sears Holdings’ CEO), his hedge fund ESL Investments and another investor group, Fairholme Capital Management — are trying to obtain internal Sears Canada documents about its restructuring plans. The motion comes after the group signaled interest in a deal with Sears Canada earlier this week. According to Reuters, the motion was a sign of the investor group’s seriousness.

Dive Insight:

Sears Canada went to court asking for creditor protection (a similar process as filing for Ch. 11 bankruptcy in the U.S.) with a plan to close stores and ultimately reemerge as an operating retailer. But there are still any number of ways the process could play out.

Right now, it’s anybody’s guess who will ultimately own the company and what the retailer will look like, and if it will indeed retain a retail presence in Canada. It's worth noting that just before Sears Canada filed and made its restructuring plans known, a report broke that the company would likely be liquidated. The court has given the retailer until October to go through the bid process, which could end with a sale of the company and its assets as a whole or in parts.

Details around Lampert and Fairholme’s interests in a sale around Sears Canada remain murky, and public filings so far shed little light on whether those investors want to end up holding all, some or none of the equity in Sears Canada at the end of the sale process. Together ESL and Lampert own about 45% of Sears Canada while Sears Holdings, which spun off the Canadian retailer in 2014, owns another nearly 12%. Fairholme owns 20.8% of the Canadian retailer, according to Reuters figures cited by Bell Media.

On a call with analysts Monday, Bruce Berkowitz, founder of Fairholme, said he saw value in Sears Canada as an ongoing concern. “Right now, we are carefully examining the filings by Sears Canada and exploring all options,” Berkowitz said, according to a transcript of the call published by the fund. “We want to make sure that the company is able to maximize the value of its assets for the benefit of all stakeholders, including us, the common shareholders. This process is expected to last for a few months. We’ll know soon enough.”

After five years of operating losses and negative cash flow, the Canadian retailer said in a June 13 release that “cash and forecasted cash flows from operations are not expected to be sufficient to meet obligations coming due over the next 12 months.” Prompting the statement were negotiations with lenders for a liquidity injection that fell short of the retailer’s needs. The company ended up in court asking for creditor protection shortly after.