Tag: receivership

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TARGET CANADA SEEKS COURT APPROVAL FOR LIQUIDATION

This blog about Target Canada is courtesy of the article written by Francine Kopun, Business reporter, The Toronto Star, published in the Saturday, January 31, 2015 edition. Our Ira Smith is again quoted.

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This image courtesy of The Toronto Star, January 31, 2015

Target Corporation announced Jan. 15 that it was pulling out of Canada, less than two years after opening its first stores. Instead of turning a profit within a year as expected, the company has lost $7-billion.

Liquidation sales at Target Canada stores could begin as early as Thursday, with its properties and leases going up for sale at the same time, according to new court documents.

Target Corporation announced Jan. 15 that it was pulling out of Canada, less than two years after opening its first stores. Instead of turning a profit within a year as expected, the company has lost $7-billion.

It was the Minneapolis-based discount retailer’s first international expansion attempt. Canadian stores were run through a wholly owned, indirect subsidiary called Target Canada Co.

Target Canada is to present a motion to the court on Wednesday asking for approval to appoint a joint venture of liquidation companies to sell off the contents of its 133 stores across Canada.

If the motion is approved by the court, the sale could begin the next day.

“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 the document.

Between them, the liquidation companies have conducted nearly all major retail liquidations in Canada, including Eatons, Dylex, Bombay, Zellers and currently, Mexx.

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 Corporation has also agreed to increase the employment trust to $90-million from $70-million (Canadian), to ensure the Canadian employees receive their full severance payout.

The liquidation is to be completed no later than May 15, but 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 signs shall advertise the sale as a “going-out-of-business sale,” or “bankruptcy sale,” and all fixtures, furnishings and equipment must go out the back doors of the buildings, after shopping hours.

Target Canada is putting all its leases and properties up for sale at the same time, publishing national ads as soon as practicable, to solicit bids as early as March 5.

“It’s not an ‘en bloc’ sale. It will, I am sure, turn out to be multiple sales. I doubt very much that one party will want to take all the real estate, but it’s one process they’re seeking approval for,” said Ira Smith, of Ira Smith Trustee & Receiver Inc.

In addition to numerous store leases, office space leases and distribution centre facility leases, Target Canada owns three distribution centres: in Milton, Calgary and Cornwall.

The stores range in size from 88,700 square feet in Corner Brook, Nfld., to 157,500 square feet at the recently opened Toronto Stockyards location.

Don’t wait until your business loses so much money that the only option is liquidation through a receivership or bankruptcy; you need professional help long before then in the form of a trustee. Contact Ira Smith Trustee & Receiver Inc. as soon as possible after the first sign that your business may be in trouble. If your company is in serious debt, from an ill-conceived start-up or otherwise, there are many options including a review & monitoring and then a restructuring & turnaround in order to preserve the business and jobs.

We approach every file with the attitude that financial problems can be solved given immediate action and the right plan for you. Business problems are the enemy that can be conquered and Starting Over, Starting Now we can get your viable business restructured and nursed back to financial health.

 

 

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CANADIAN REAL ESTATE BUBBLE BURST: WHEN?

Canadian real estate bubble, Canadian real estate bubble burst, The Suites at 1 King West, receivership, Court-appointed receivership, real estate, statistics, financial crisis in Canada, residential construction, debt-to-income ratio, financial crisis, residential mortgage debt, Canadian Bankers Association, Canadian real estate industry, living paycheque to paycheque, credit cards, credit card debt, credit report, bankruptcy alternatives, credit counselling, debt consolidation, consumer proposals, personal bankruptcy, starting over starting now, debt settlement, debt settlement companiesWill the Canadian real estate bubble burst has been the subject of several articles in the newspapers recently quoting Canadian and American economists. So far from what I have read, half of the economists quoted say there is not a Canadian real estate bubble, with statistics to show that there is a healthy real estate market and therefore we will not have a Canadian real estate bubble burst.

The other half of the economists, provide statistics to show that there is a Canadian real estate bubble, it has reached the same unsustainable levels as was the case in 2008 in the United States and that there will be a Canadian real estate bubble burst to drag all of us down.

Although my Firm has done many real estate receiverships, the most famous so far being the Court-appointed receivership of the highly publicized The Suites at 1 King West, built by Harry Stinson, my crystal ball is no better than yours. I cannot tell you if:

  1. a Canadian real estate bubble burst will not happen since we are in a safe real estate market where Canada is attractive to immigrants from around the world looking for a safe haven for their money, and they truly believe Canadian real estate is it; or
  2. real estate prices are unreasonably high and that there will be a Canadian real estate bubble burst.

As far as the economist’s statistics, which are being used to prove both sides of the argument, all I can do is quote British Prime Minister Benjamin Disraeli when he said there are “Lies, damned lies, and statistics“, to describe the persuasive power of numbers, particularly the use of statistics, to bolster weak arguments.

In our recent blog, FINANCIAL CRISIS IN CANADA: CAN REAL ESTATE PRICES TRIGGER ONE?, we reported that:

  1. 7.5% of the Canadian workforce is in the construction industry, while 7% of the Canadian economy is based on residential construction – both record highs;
  2. the Canadian unemployment rate rose from 6.9% to 7.2%;
  3. the Canadian debt-to-income ratio has soared to a record 164%, above levels experienced in the U.S. before the financial crisis; and
  4. the Canadian Bankers Association reports that 70% of all household debt in Canada is made up of residential mortgage debt.

But there is one certainty I can tell you about. Even if there is a slowdown in the Canadian real estate industry, and not a Canadian real estate bubble burst, residential construction workers and real estate agents will suffer. A slowdown in residential construction, and less residences being sold, does not bode well for these two groups. So it will be the severity of the slowdown, and the effect on real estate prices, to know whether or not there actually is to be a Canadian real estate bubble burst.

So, what can they do to stop a Canadian real estate bubble burst? The answer is nothing. However, they should always have arranged their affairs so when there is a slowdown, they were always:

  1. living within their means by spending less than they earn so that they would not have problems living paycheque to paycheque;
  2. using proper budgeting techniques to make sure they were paying down a portion of their debt with every pay;
  3. paying themselves first by maintaining a program to make sure that they were putting away a portion of every pay into savings for investment so that they would be able to weather any downward blips in their income;
  4. making sure their income tax was paid up on time so that they would not have any large amounts outstanding from past years in a time when their incomes were reduced;
  5. only charging to credit cards what they would be able to pay off in full every month so as not to incur credit card debt with high interest costs; and
  6. reviewing their credit report to make sure their credit rating was accurate, and if they were experiencing any credit problems availing themselves of a proper credit counselling agency, NOT one of the debt settlement companies.

So as you can see, there is no magic pill that you can take to solve your financial problems if there is a Canadian real estate bubble burst, an illness, an emergency, or when life just throws a curve ball at you. The best time to have guarded against financial challenges, if you truly were worried about a Canadian real estate bubble burst, was before it happened.

If you’re financial well-being, and that of your entire family depends on the value of your real estate always rising, and you will be doomed if there is a Canadian real estate bubble burst, whether you wish to admit it or not, you have serious financial problems. Before disaster strikes as a result of a Canadian real estate bubble burst or otherwise, contact Ira Smith Trustee & Receiver Inc.

We can review your situation with you, in a no charge initial consultation meeting, and provide you with real options. If we meet early enough, we can discuss various bankruptcy alternatives such as credit counselling, debt consolidation or consumer proposals, all in order to avoid personal bankruptcy. We will go over all of your options, and encourage and help you to implement the one that is right for you.

Together we can solve your problems with immediate action and the right plan so that Starting Over, Starting Now will become your reality.

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OWED WAGES BY EMPLOYER? FIND OUT IF YOU QUALIFY TO GET PAID

accrued vacation pay wage earner protection program, owed wages by employer, starting over starting now, avoid bankruptcy, licensed trustee, trustee, Service Canada, receivership, bankruptcy, notice of intention to make a proposal, Division I Proposal, Companies’ Creditors Arrangement Act, WEPPA, bankrupt, wages, Bankruptcy and Insolvency Act, BIADo you believe you wages are owing to by your employer? People ask us what if my employer owes me money & goes into either receivership or bankruptcy.

We answer if wages are owed by your employer and the company is either in receivership or is bankrupt don’t despair; there is hope for you to recuperate monies owed to you. The Wage Earner Protection Program (“WEPP”) Act – WEPPA – in conjunction with an amendment to the Bankruptcy and Insolvency Act (Canada) – BIA – created a mechanism for employees to be compensated for claims of unpaid wages, commissions and vacation pay accrued in the six months preceding the employer files for bankruptcy or being placed in receivership and wages are owed to you along with claims for unpaid termination and/or severance pay.

Are there any exceptions to this? What are the rules?

There are a few exceptions. You are generally not eligible if, during the period for which you wages are owed to you by your employer, you:

  • were an officer or a director of your former employer
  • had a controlling interest in the business of your former employer
  • were a manager whose responsibilities included making binding financial decisions impacting the business of your former employer, and/or making binding decisions on the payment or non-payment of wages by your former employer

Who is eligible for the WEPP? You may apply if wages are owed to you by your employer and:

  • your former employer has filed for bankruptcy or is subject to a receivership
  • wages are owed to you by your employer, vacation pay, termination or severance pay from your former employer
  • amounts earned during the eligibility period or, in the case of termination or severance pay, your employment was terminated during the eligibility period ending on the date of bankruptcy or receivership

One more very important exception – it only applies if wages are owed to you by your employer and your employer is in either receivership or bankruptcy and owes you wages. If your employer is attempting a corporate restructuring under a Notice of Intention to Make a Proposal, a Division I Proposal or the Companies’ Creditors Arrangement Act, then WEPPA and its provisions do not come into play.

Claim limits

Regardless of the total amount owing to you, the maximum any employee can receive under WEPPA is the greater of $3,200 or four times the maximum weekly insurable earnings under the Employment Insurance Act (which is now greater than $3,200). Once employees file claims with both the Trustee and Service Canada, Service Canada pays their claims for owed wages by employer and Service Canada becomes the creditor. The amendment to the BIA has recognized WEPPA and created a priority charge that supersedes all secured charges except CRA’s deemed trust claim (and the reclaiming rights of farmers and suppliers) to a max of $2,000 per employee, secured against current assets.

Documentation

While no one wants – or expects – to be part of a receivership or bankruptcy, you should always keep detailed records of hours worked for any pay period. On any occasion when you discover there will be no paycheque, record the loss that you will suffer, such as not being able to pay bills or buy groceries. Ask for a formal explanation from your employer and keep detailed notes on your efforts. It’s important to prove that when owed wages by employer; you still expect to be paid, even if it’s late.

If your employer is in receivership or bankruptcy proceedings, and you believe you have a claim for owed wages by employer, find the trustee and get in touch with Service Canada. Have your records ready and make sure you get your Proof of Claim.

If you are experiencing financial problems, contact Ira Smith Trustee & Receiver Inc. We are a licensed trustee and will listen to your issues and offer compassionate, professional assistance to aid you to avoid bankruptcy, so that you can regain control of your life, Starting Over, Starting Now.

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RECEIVERSHIP IN BANKRUPTCY – WHAT DOES THAT MEAN?

receivership in bankruptcyFor those looking at insolvency, you may have heard the phrase –receivership in bankruptcy – and wondered what it meant. This phrase is both inaccurate, and in the area of the Canadian insolvency process, yet still possible. Are you confused yet? What is the source of the confusion? Most likely, people confuse the job of a licensed insolvency trustee with the job of a receiver. This is because one of the functions of a licensed trustee is to take possession of the assets of the bankrupt person or company, sell those assets, receive the money and then distribute the money to the creditors as prescribed in the Bankruptcy and Insolvency Act (Canada) (BIA).

In this situation, the trustee is receiving funds, but in no way is regarded as a receiver in any legal way. What does a licensed bankruptcy trustee do? In Toronto, and all of Canada, a bankruptcy trustee is licensed by the Federal government and works on behalf of all the unsecured creditors; this is the case even though the individual or company is the one who chose the licensed trustee prior to assigning itself into bankruptcy. Creditors have rights and are entitled to get their portion of the money owed to them when it is possible from the licensed trustee administering the bankruptcy. But in corporate insolvency, there is no term called receivership in bankruptcy.

For an individual, a licensed trustee can also help the person look at bankruptcy alternatives, such as debt consolidation, credit counselling and consumer proposals to deal with creditors and avoid bankruptcy. Consumer proposals reduce and reorganize an individual’s debt and if accepted, the successful consumer proposal helps the person recover from their debt and not do as much damage to their credit score. What is a receivership?

Receivership is a process that is available to lenders or other secured creditors only (as opposed to bankruptcy which is a remedy for unsecured creditors) to seize the assets of the company subject to the lender’s security through the appointment of a receiver. The receiver, who also must be a licensed trustee, will determine if the highest recovery can be gained from running the company or shutting it down, all while devising and implementing a plan to sell the assets. This is done in order to recover the greatest amount of money possible under the circumstances for the lender who appointed the receiver.

So how can there be a receivership in bankruptcy? As described in this blog, receivership is a remedy for secured creditors, while BIA proceedings, other than receivership, are a remedy to benefit the unsecured creditors. In some cases, it is necessary to have a bankruptcy administration, at the same time there is a receivership. The reasons why are much too complex for the purposes of this blog, but now you know, that although the phrase is inaccurate, it is still possible.

Receivership in bankruptcy summary

Before receivership or bankruptcy becomes your only option, there are alternatives including credit counselling, debt consolidation, and consumer proposals. Contact us today. The team at Ira Smith Trustee & Receiver Inc. will work with you to ensure that Starting Over, Starting Now you can regain financial health.

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WHAT HAPPENS IF MY EMPLOYER OWES ME MONEY & GOES BANKRUPT?

employer owes me money went bankrupt did not pay employees

Employer owes me money: Introduction

People ask us what if my employer owes me money & goes bankrupt? We answer if your employer is bankrupt don’t despair; there is hope for you to recuperate monies that are owing to you. The Wage Earner Protection Program Act – WEPPA – with an amendment to the Bankruptcy and Insolvency Act (Canada) – BIA – created a mechanism for employees to be compensated for claims of unpaid wages, commissions and vacation pay accrued in the six months preceding the employer files for bankruptcy or being placed in receivership and have unpaid wages along with claims for unpaid termination and/or severance pay.

This amendment came into being as a result of the federal government’s previous concern that when you experienced “my company owes me money & went bankrupt” there was rarely an opportunity for you to get the wages you owing to you.

However, you are generally not eligible if, during the period for which eligible wages are unpaid, you:

  • were an officer or a director of your former employer
  • had a controlling interest in the business of your former employer
  • were a manager whose responsibilities included making binding financial decisions impacting the business of your former employer, and/or making binding decisions on the payment or non-payment of wages by your former employer

Employer owes me money: Who is eligible for the WEPP?

So, if the employer went bankrupt did not pay employees:

You may apply if:

  • your former employer has filed for bankruptcy or is subject to a receivership
  • you have unpaid wages, vacation pay, termination or severance pay from your former employer
  • amounts earned during the eligibility period or, in the case of termination or severance pay, your employment was terminated during the eligibility period ending on the date of bankruptcy or receivership

What is the eligibility period?

The eligibility period is defined as the period in which wages and vacation pay are earned to be compensated under the WEPP and in which your employment must have ended to be eligible for termination and severance pay. The eligibility period starts six months before a restructuring event and ends on the date of bankruptcy or receivership. Should your employer not have gone through restructuring, the eligibility period is the six-month period ending on the date of bankruptcy or receivership.

What are eligible wages under WEPP?

Each case is examined individually and I strongly suggest that you contact a Trustee for a correct answer to the question “my employer owes me money & went bankrupt”. There remains some confusion and a disconnect between WEPPA and the BIA. WEPPA includes severance and termination pay while the BIA excludes severance and termination pay from compensation in sections 81.3 and 81.4. Such claims have and continue to be recognized by the BIA as being ordinary unsecured claims.

How much can I expect to receive?

Regardless of the total amount owing to you, the most any employee can receive under WEPPA is the greater of $3,200 or four times the maximum weekly insurable earnings under the Employment Insurance Act (which is now greater than $3,200). Once employees file claims with both the Trustee and Service Canada, Service Canada pays their claims and Service Canada becomes the creditor. The amendment to the BIA has recognized WEPPA and created a priority charge that supersedes all secured charges except CRA’s deemed trust claim (and the reclaiming rights of farmers and suppliers) to a max of $2,000 per employee, secured against current assets.

Do you have too much debt?

Contact Ira Smith Trustee & Receiver for more information if you have the questions “my employer owes me money and has gone bankrupt” or on any and all matters related to corporate or personal bankruptcies. We are full-service insolvency and financial restructuring practice serving companies and people throughout the Greater Toronto Area (GTA) facing financial crisis or bankruptcy that need a plan for Starting Over, Starting Now.

Call a Trustee Now!