and severance pay claims, up to the
maximum amount. Were it not for
the existence of this program, the
employees would not have received
any payment with respect to their
termination and severance pay
claims, as these would have ranked
behind the secured creditors.
Several large Canadian retailers have
undergone successful restructurings in
instances in which the debtor was able
to revise its business model to meet
the changing demands of consumers.
However, as the Blockbuster receivership
proceedings demonstrate, troubles
at other companies resulted in wind
downs and liquidations of their assets.
Examining cases like these
demonstrates that careful analysis
of a retailer’s operations, leases,
inventory requirements, and IP, as
well as understanding the unique
liabilities relating to unpaid supplier
and employee claims, will assist
insolvency professionals in planning
successful wind downs or restructurings
in retail insolvency proceedings. J
1 Burgess, Rick. “Americans Will Watch
More Streaming Movies in 2012 Than
DVD And Blue-Ray Combined”. Techspot.
March 23, 2012. Web. July 30, 2013.
2 CBC News, “Netflix reaches 1 in 10 Canadians.”
CBC News Technology and Science.
March 20, 2012. Web. July 30, 2012.
3 Eligibility period refers to the period that
is six months before the date of the initial
bankruptcy event and ending on the date
of the bankruptcy or receivership.
Caryl Newbery-Mitchell is a vice president in the
Corporate Recovery and Restructuring group at MNP
Ltd. and is based in Toronto, and Dan Wootton is a
vice president in the Recovery and Reorganization
Group at Grant Thornton Limited in Toronto.
Newbery-Mitchell provides formal insolvency services
and consulting advice to lenders, creditors, debtor
companies, and other stakeholders in a variety of
industries. She holds an MBA from Wilfrid Laurier
University, is a licensed trustee in bankruptcy and a
Chartered Insolvency and Restructuring Professional
(CIRP), and the current chair of the TMA Toronto
Chapter’s NextGen Committee and a representative
on the TMA Global NextGen Committee. Wootton
provides insolvency and turnaround services to
secured lenders and regulators for businesses,
primarily in the retail, manufacturing, hospitality,
construction, housing, and finance industries.
We had a growth plan. But, we needed a banking
partner who understood our business model
and could help us leverage our assets. Our
business thrives on the same level of customer
service that AloStar exhibited with us. They
patiently answered our questions, invested
the time to understand what we were doing,
and then created a reasonable plan to provide
the working capital we needed. It was clear
they wanted to earn our business. Now, we’re
enjoying fresh growth and adding value for
our shareholders. Best of all, we are creating
new jobs as we expand.