After taking 26 months to launch its first stores in Canada, U.S. discounter Target Corp. is now looking at shutting all 133 of them in just three months – a month less than originally planned.
In a sign of how fast the retailer is moving to leave this country, insolvent Target Canada plans to speed its store closings by one month and turn off the lights by mid-April, a court filing this week says.
"It is anticipated that the pace of delivery of Vacate Notices by the [liquidation] agent will continue to increase over the next two weeks, such that all stores are expected to be closed to the public as early as mid-April, 2015, which represents a significant achievement," says court-appointed monitor, Alvarez & Marsal Canada Inc.
Since Target Canada filed for creditors' court protection on Jan. 15, it has been hit with a flood of bad publicity about everything from disappointing liquidation sales to the treatment of its suppliers, pharmacists and other creditors.
Now the U.S. retailer is taking steps to rush its exit, helping to take the spotlight from its failed foray outside its home market where it still has avid cross-border Canadian shoppers.
But the chain isn't going to be able to leave without a few more fights. A group of suppliers are pressing Target for more information as the vendors try to get back the equivalent funds for the goods that the retailer ordered from them in the 30 days before it filed for court protection.
The suppliers are trying to convince Target to give creditors precedence to get their hands on $1.9-billion of inter-company debt that Target owes one of its own divisions. The inter-company claim essentially makes Target its own biggest creditor. The suppliers argue that Target shouldn't have ordered the so-called 30-day goods because it was planning a shutdown.
At the same time, Target's franchised pharmacists are battling to recover lost funds from the retailer – and extensions for some of them to keep operating longer – while landlords are going through an auction for Target store leases.
Lawyer Lou Brzezinski of Blaney McMurtry LLP, who represents some of the suppliers, said in a filing this week he wants to cross examine Brian Cornell, chief executive officer of parent Target Corp., if information isn't forthcoming from Target Canada.
Justice Geoffrey Morawetz of Ontario Superior Court has already given Mr. Brzezinski the green light to cross examine Mark Wong, general counsel of Target Canada.
"In our view, it makes the most sense for [Target Canada] and Target Corporation to also produce the CEO of Target Corporation, Brian Cornell, for examination, particularly given that Target Corporation enjoys the benefit of protection of its derivative liability from claims made against" Target Canada," Mr. Brzezinski said in a letter to Tracy Sandler, partner at Osler Hoskin & Harcourt LLP, which represents Target Canada. The court has essentially protected the parent company from claims against it tied to the Canadian insolvency filing.
On Monday, the court will be asked to approve a $2.2-million (U.S.) deal in which the parent company would buy an array of items from its Canadian division, including a bronze bull's eye sculpture at the company's Mississauga headquarters. The bull's eye is the retailer's logo.
Other goods that Target Corp. wants to buy are 28,000 of its signature red shopping carts, 12,600 shopping baskets, 912,000 bags and 1,500 checkout lane lights. Various store signs, fixtures and "spider wrap and keys" electronic security devices are part of the deal, as well as merchandise from its bull's-eye boutique, such as mugs and yoga bags.
Target says the deal is worth another $1.9-million (Canadian) because it will also pay for the removal and destruction of the purchased items, according to court documents.
Already Target has closed 16 stores, with another scheduled to shut on Friday, six on Monday and a total of 78 by April 2, a filing says.