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.
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.
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