TORONTO -- Dozens of former Sears Canada employees packed a Toronto courtroom Thursday to hear the retailer ask for approval to kick-start the process of putting itself up for sale while it is under creditor protection.

"I'm in total shock this happened," said Zobedida Maharaj outside the Ontario Superior Court.

Maharaj, 53, said she had worked at Sears Canada for 28 years before she was laid off at the end of March when her store was closed.

The senior manager of operations and merchandise said she was initially told she would get eight weeks of severance and benefits but was cut off June 22 when the company secured temporary court protection from creditors.

"It's like getting slapped in the face."

Lawyers for Sears Canada, its lenders, retirees and former employees were before Judge Glenn Hainey to discuss, among other issues, whether the department store owner should be permitted to proceed with a sale.

Sears Canada wants to close dozens of stores in the coming weeks while it negotiates with potential buyers who might acquire some or all of the company's remaining assets, pending court approvals.

A decision on whether it can go ahead with the sales process is expected later Thursday.

Earlier in the day, Sears Canada struck a deal over benefit and pension payments to retired employees. The retailer had initially asked the court for permission to immediately halt payments for pension, health and dental benefits for former employees, retirees and surviving spouses due to a severe cash crunch, but later agreed to continue payments to retirees until Sept. 30.

In separate documents filed by Sears Canada's lawyers prior to Thursday's hearing, Sears Canada's chief financial officer says it's "crucial" to begin liquidation sales of inventory no later than July 21 and completing them by Oct. 12. Hainey is expected to hear that motion Tuesday.

However, many former employees, who were asked to leave the courtroom after officials deemed the crowd size was causing a fire hazard, said the company's compromise on temporarily paying retiree benefits and pension compensation has them cautiously hopeful.

Pina Rupa, 58, from Vaughan, Ont., said outside the courthouse she was angry Sears Canada paid her no severance after she worked there for nearly 40 years.

"I was such a loyal employee," Rupa said, who was laid off from the company's head office.

Peter Myers, a brother of actor Mike Myers and star of a recent Sears television commercial, also lost his job and was present at Thursday's hearing.

Employment lawyer Susan Ursel, whose firm represents more than 17,000 non-unionized former and current employees, said it is filing motions to ask the court to reinstate benefit, severance and pension payments to the workers who were laid off. It is also asking to set up a temporary hardship fund for those who are in dire need of cash and health benefits.

In addition to the job cuts at its head office, Sears plans to lay off more employees as it shutter 59 locations across the country.

Sears Canada had announced in June that in addition to the store closures, it was cutting approximately 2,900 jobs as part of a restructuring under the Companies' Creditors Arrangement Act.

Premier Kathleen Wynne said her government is paying close attention to the situation but there isn't a role it can play at this point.