A boutique Toronto law firm serving
clients across Canada since 1987

Oct 26, 2017

What consumers should know in the wake of commercial bankruptcy

When a large company files for bankruptcy, many stakeholders are affected. Creditors, customers and employees may all have questions about their rights under Ontario commercial bankruptcy law in such an occasion. The recent Sears Canada closures have drawn attention to many of the considerations for retailers and shoppers when a business of such scale closes its doors.

Warranties are one of the main things shoppers should consider if a company they bought items from is undergoing commercial bankruptcy. In Sears Canada's case, Sears Protection Agreements (SPAs) will not be honoured after Oct. 18. Warranties will only be refundable to those who purchased them in the past 30 days. According to a spokesperson for the central Ontario Better Business Bureau, it is typical for warranties to be voided in the event of bankruptcy. Concerned customers may wish to contact a retailer such as Sears if they have concerns about how a bankruptcy may affect their warranty.

Those who have purchased an item on a payment plan must still continue to make payments to a company filing for commercial bankruptcy. This obligation will continue even after a company closes its doors. Those holding points and rewards on a card from a company going out of business, such as Sears Club Rewards, should use points as soon as possible to ensure they are claimed before any policy changes.

Commercial bankruptcy can be challenging for everyone involved, and it is possible that missed deliveries or mis-communications may take place. Consumers with concerns may wish to contact a lawyer about their options. Ontario businesses wishing to understand their obligations in the case of bankruptcy would also benefit from legal advice related to these issues.

Source:, "What happens to Sears warranties, reward points, and more", Julie Cazzin, Oct. 16, 2017