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Judge OKs Eaton’s Closeout

Having a major anchor go out of business is tough enough, but T. Eaton Co.’s landlords were forced into court in August to combat the venerable retailer’s plan for going-out-of-business sales. In the end, the developers got some, though not all, of what they wanted.

An Ontario judge ruled late in August that Toronto-based Eaton’s can continue with most of its national going-out-of-business sale — but with some restrictions sought by landlords of the insolvent department-store chain, according to the Canadian Press (CP) wire service.

Cadillac Fairview, Cambridge Shopping Centres and Oxford Development had argued in court that the Eaton’s close-out sale would hurt other tenants of their regional malls.

“We’re assuming that [a liquidation sale] will negatively impact sales throughout the process,” said Eamon Kelly, CMD, general manager of the 1.6 million-square-foot Toronto Eaton Centre. “When somebody has a liquidation sale it really impacts the rest of the retail tenants, because [the liquidator] will be selling items at a discounted rate that the other retailers also carry.”

The developers also said it violated the company’s lease agreements to run “first-class” department stores, not liquidation outlets.

Justice James Farley of Ontario Superior Court, after a weekend of reflection, ruled that the close-out sale could go on, the CP reported, quoting a Toronto television station. But the judge disallowed part of the Eaton’s liquidation agreement he had approved a week earlier that would have let Gordon Group Holdings, the liquidators conducting the sale, sell additional merchandise to round out the merchandise stock.

“It’s tantamount to a sublease of the property,” Cambridge CEO J. Lorne Braithwaite said prior to the reversal of the decision. “They’re running a very different business than what the lease provides for.”

The chain is expected to cease operations at its 64 stores by November.