In an earlier post we wrote about retailer Target Canada seeking protection from the court under the Companies’ Creditors Arrangement Act. Following the closure of all of the retailer’s stores, it proposed a recovery plan. In addition to suppliers to which money was owed, the plan also involved landlords unexpectedly impacted by the sudden closure.
Under that plan, for creditors to recoup some of what is owed, landlords would have to drop guarantees some put in place to cover their losses should the business be unsuccessful. In that post we indicated the acceptance of that plan by the company’s creditors was necessary for it to be applied.
Recently, the proposed recovery plan was thrown out by a Canadian court before creditors had a chance to officially weigh in on the matter. Though the reasons for this action are not yet clear, this turn of events leaves all parties involved unsure of how the matter will be resolved. As a result of this, creditors throughout the country, including those in British Columbia, could find they are eligible for even less than what was provided under the proposed plan. It is even possible the case could end up in full bankruptcy. Should that occur, a third-party trustee would be put into place.
While most businesses that face insolvency are not as large as this one, this case nonetheless illustrates how complicated the process can be. Because the best way to deal with a company’s financial difficulty will vary it is wise to consult a bankruptcy lawyer for assistance in identifying options and navigating the process.