Everything must go
Target begins liquidation sales at Canadian stores,
The liquidation sale at Target Canada stores will start Thursday morning, with merchandise discounts of up to 30 per cent off.
And after a daylong hearing in Ontario Superior Court, the liquidators were told they could start contacting parties interested in buying store leases and other Target properties in Canada, in order to maximize the return on what is estimated to be $1.1-billion worth of commercial real estate.
The hearing in Toronto was attended by 37 lawyers, most of whom represented landlords for 115 of the 133 Target stores being closed.
By the end of the day, the lawyers had agreed to let real estate sales inquiries proceed, while also agreeing to another court date next week to hammer out the details.
“These are really significant assets,” said Richard Orzy, a restructuring, insolvency and bankruptcy lawyer with Bennett Jones.
That firm represents RioCan, the single largest Target Canada landlord with 26 leased properties, and Kinsett, a landlord for five of Target Canada’s leased premises, according to a submission made to the court.
Among other things, the closure of Target stores could negatively affect other tenants, who could in turn seek redress from landlords, Orzy said.
Justice Geoffrey Morawetz’s small courtroom had been packed since 8:30 a.m.
Lawyers representing creditors were also present, including Lou Brzezinski of Blaney McMurtry, who has launched a blog to keep creditors informed at blaneystargetccaa.com.
“We have an issue with deep discounting. It doesn’t help our brands,” said Brzezinski, representing Nintendo, Universal Studios DVD, Nestlé, PepsiCo Canada and Mars Canada among others.
Target Corp. announced Jan. 15 that it was pulling out of Canada less than two years after opening its first stores here.
Instead of turning a profit within a year, as expected, the company has lost $7 billion on its Canadian venture.
“The Target Canada Entities believe that it is crucial to begin a sales process immediately in order to implement the orderly wind down of the business and to maximize the amounts available to their respective stakeholders,” according to documents filed with the court.
Store liquidations will take place during regular store hours beginning Thursday morning.
According to the court documents, notices of termination have been sent to the vast majority of 17,600 employees — almost half of whom work at Target stores and offices in Ontario. The head office in Mississauga is being operated with a reduced team focused on winding down the business in an orderly fashion.
Target Corp. has also agreed to increase the employment trust to $90 million from $70 million, to ensure the Canadian employees receive their full severance payout.
Sales at some stores are expected to be finished as early as the end of March, according to the documents.
The company has stipulated that no
“We have an issue with deep discounting. It doesn’t help our brands.” LOU BRZEZINSKI LAWYER
signs shall advertise the sale as a “goingout-of-business sale” or “bankruptcy sale,” and all fixtures, furnishings and equipment must go out the back doors of the buildings after shopping hours.