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rfmcdonaldThe Globe and Mail's Marina Strauss notes the continuing aftermath of Target Canada's collapse.
Some creditors of the failed Target Canada, including landlords and pharmacists, are uncertain about what its proposed recovery plan will mean for them, raising questions about whether it will win quick creditor approval.
The plan, filed in court late last week, proposes that many creditors receive 75 to 85 per cent of their “proven” claims. But the complex proposal also says U.S. parent Target Corp. will drop its $1.4-billion intercompany claim (originally valued at $1.9-billion) only if it secures a release from landlords from its lease guarantee obligations that could potentially be worth even more. Instead, the landlords would have to agree to a formula of payments, plus an enhanced “top-up” amount from Target, which is unsatisfactory to some of the landlords.
“Landlords are reviewing the documents and reviewing all of their options,” said Linda Galessiere, a lawyer at McLean & Kerr LLP who represents a number of key landlords.
In developing its plan, Target aimed to avoid costly and protracted litigation with creditors while gaining a speedy green light from them. To help reach its goals, Target came to a $132-million settlement with its largest landlord, RioCan Real Estate Investment Trust, in which RioCan released Target from those lease guarantees. The agreement possibly paves the way for Target to win enough votes for the plan to get the nod, but landlord and pharmacist concerns still threaten to derail a fast resolution.
Five landlords will be in court in the next week or so to try to force Target to pay them about $4-million of the guarantees under their leases, underlining a key contentious issue that could thwart plan approval by early next year.
Some creditors of the failed Target Canada, including landlords and pharmacists, are uncertain about what its proposed recovery plan will mean for them, raising questions about whether it will win quick creditor approval.
The plan, filed in court late last week, proposes that many creditors receive 75 to 85 per cent of their “proven” claims. But the complex proposal also says U.S. parent Target Corp. will drop its $1.4-billion intercompany claim (originally valued at $1.9-billion) only if it secures a release from landlords from its lease guarantee obligations that could potentially be worth even more. Instead, the landlords would have to agree to a formula of payments, plus an enhanced “top-up” amount from Target, which is unsatisfactory to some of the landlords.
“Landlords are reviewing the documents and reviewing all of their options,” said Linda Galessiere, a lawyer at McLean & Kerr LLP who represents a number of key landlords.
In developing its plan, Target aimed to avoid costly and protracted litigation with creditors while gaining a speedy green light from them. To help reach its goals, Target came to a $132-million settlement with its largest landlord, RioCan Real Estate Investment Trust, in which RioCan released Target from those lease guarantees. The agreement possibly paves the way for Target to win enough votes for the plan to get the nod, but landlord and pharmacist concerns still threaten to derail a fast resolution.
Five landlords will be in court in the next week or so to try to force Target to pay them about $4-million of the guarantees under their leases, underlining a key contentious issue that could thwart plan approval by early next year.
