[LINK] "Target Canada nearing a deal with its key creditors"

[rfmcdonald]

The Globe and Mail's Marina Strauss reports on how Target Canada is approaching a settlement with its various creditors, with the help of the parent company.

[Target Canada]'s original recovery plan in late November had proposed that many unsecured creditors would be paid 75 to 85 per cent of their proven claims. But it would have meant much less for some of its landlords, who vigorously opposed the plan. In an unusual move, the Ontario Superior Court struck down the plan in January.

On Thursday, U.S. parent Target Corp. was ready to kick in an additional $30-million-plus for the former landlords, industry sources said. And the latest proposal would reduce the amount other unsecured creditors – mostly suppliers – would get by about 8 per cent of their proven claims from what they would have got in the original proposal, and directs those funds to the landlords, sources said.

Under the latest proposal, unsecured creditors would get between about 67 and 77 per cent of their proven claims rather than between 75 and 85 per cent, as had been proposed late last year, sources said.

The parties were in confidential talks late Thursday and the agreement could still be revised. Target Canada is to present the court on Friday with a landlord deal.

Target Corp. has also agreed to let creditors get their hands on a controversial $1.4-billion of intercompany claim that could have landed in its corporate coffers. In the original plan, Target, in exchange, had proposed that landlords accept a formula of payments that would have released the parent company from having to guarantee future lost rents for some landlords.

Justice Geoffrey Morawetz rejected the plan for reneging on a promise Target had made to the landlords to cover their future losses in the event that the retailer collapsed here.