Lexpert Magazine

Jul/Aug 2016

Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.

Issue link: https://digital.carswellmedia.com/i/707166

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42 LEXPERT MAGAZINE | JULY/AUGUST 2016 FEATURE CONFRONTATION TO COLLABORATION TO UNANIMITY. Bitter public backlash to creditor consensus. Reputational risk to effective damage control. ese are the hallmarks of Target Canada Co.'s restructuring, representing a 16-month- long swing of the pendulum in a proceeding that could otherwise have culminated in years of litigation and uncertainty for small and large creditors alike — not to mention a bigger black eye for the Target brand, already diminished by the well-documented litany of un- preparedness and poor judgment culminating in a debacle that included what was then the largest mass termination of employees in Canada. On January 15, 2015, Target Canada announced that Ontario Superior Court Justice Geoffrey Morawetz had granted it creditor protection under the Companies' Creditors Ar- rangement Act. e Canadian operation had averaged $200 million in losses in each quar- ter of its existence. It had liabilities exceeding $5 billion. Within three months, Target had shuttered 133 stores in Canada. It was a stunning demise to the US chain's first international foray, ever so far removed from its expectation of profitability within its first year of operations. e end came just four years aer the par- ent company, Target Corp., spent $1.8 billion to purchase the leases of the defunct Zellers chain as part of its $7-billion investment in Canada. In February 2015, the court approved an inventory and real estate liquidation and sale process that was substantially concluded by the fall. e parties then undertook a TARGET LITIGATION Target Canada may be gone, but its quick and orderly exit through an extremely complex restructuring should serve as guidance for American chains seeking to do business in Canada BY JULIUS MELNITZER PHOTO: SHUTTERSTOCK

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