TORONTO (Reuters) - Canadian furniture maker Shermag Inc said on Monday that a Quebec court has extended its creditor protection status to allow it to develop a plan of arrangement to propose to its creditors.
The Sherbrooke, Quebec-based company has been under court protection since May. The new order extends the stay of proceedings against Shermag and its subsidiaries until December 10.
The company said the extension will give it time to file its plan of arrangement and hold a meeting with its creditors.
Shermag's shares were down 21.9 percent at 12-1/2 Canadian cents at midmorning on the Toronto Stock Exchange, extending the dive the stock has seen since 2004. Shermag stock is down more than 90 percent from the year high it reached last October.
The Quebec Superior Court also approved the liquidation of surplus inventory and equipment, as well as the sale of Shermag's head office building.
Shermag, which designs and manufactures home furniture, has been hit by the weak U.S. housing market, the recent strength of the Canadian dollar and increasing competition from low-cost Asian suppliers.
In April, investment firm Clarke Inc withdrew its offer to buy Shermag after the company's independent directors decided against the bid.
($1=$1.07 Canadian)
(Reporting by Leah Schnurr; Editing by Peter Galloway)
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