Market researcher Tanya Vierhuis, who owns her own firm, couldn’t cash an $18,000 cheque from Target that was dated Jan. 13.Fred Lum/The Globe and Mail
When Target Canada collapsed into bankruptcy protection last month, hundreds of suppliers like Tanya Vierhuis felt the fallout.
The 20-year veteran market researcher spent months working on a major customer-feedback project for the discount retailer. Just before Target was granted court protection from creditors, the company sent her a cheque for $18,000, the final payment for her work. The cheque was dated Jan. 13, two days before the court filing, but she didn't get it until Jan. 26. When she went to the bank to cash it, the cheque bounced.
Now, she's among nearly 2,000 unsecured creditors who are waiting to see if and when they'll get any of the money they're owed.
"That's my mortgage payment for the next four months," said Ms. Vierhuis, a 44-year-old single mother of a 12-year-old son.
Ms. Vierhuis was far from alone in getting a rude surprise when Target announced it was quitting Canada and closing its 133 stores by the spring. The failed retailer is letting go its 17,600 employees – plus another 720 at its U.S. head office and in India.
But others also are feeling the pain, including suppliers such as Ms. Vierhuis, landlords and Target's franchised pharmacists.On Wednesday, suppliers made a bit of headway in Ontario Superior Court in their tussle with Target Canada to try to get back some of their inventory. Some are worried the chain bulked up on orders in the month before it filed for creditors' protection.
Melvyn Solmon, a lawyer at Solmon Rothbart Goodman LLP representing baby product supplier ISSI Inc., told the court he wants to find out the value of the merchandise that Target ordered in the 30 days before its filing. If Target's insolvency were an all-out bankruptcy, vendors of those 30-day goods would have the right to ask to get them back.
Mr. Solmon said in an interview the current proceedings are a liquidation and not a restructuring, which could open the way for suppliers to be able to retrieve their 30-day goods (or proceeds from their sales). Target values all the merchandise in its current liquidation sales at $445-million to $475-million at wholesale cost, according to a recent court filing.
Justice Geoffrey Morawetz gave Target a week to produce data on the value of its 30-day goods. Lawyers for Target had argued that they needed 10 to 14 days to collect the information.
Target's franchised pharmacists, for their part, asked Justice Morawetz to force Target to provide them with financial assistance as they struggle to find a buyer for their patient records and inventory. Target had rejected the request, but the judge reserved his decision until next week. The court also approved a compromise agreement with Target's landlords for its sale of leases as it looks for new tenants to take over the store locations.
For Ms. Vierhuis, whose company is called Blue Vista Insights, the court wrangling has yet to yield any financial relief. With extensive experience as a market researcher at major retailers such as Hudson's Bay Co. and Sears Canada Inc., she had launched her own firm last year with Target as her main client.
The time she spent on the Target project "meant I wasn't pursuing other business," she said. She delivered her project on Dec. 15, and the research was headed for Target's CEO, she said.
Target officials had even told her she was in their budget for 2015. "I felt optimistic … Target never would have been a company you would expect to have that kind of risk." Now, she has to dig into her personal savings to keep going.
Still, she has nothing but praise for the Target employees with whom she worked. "There are a lot of people who are going to be affected by this," she said of the insolvency.
Lou Brzezinski, a lawyer at Blaney McMurtry LLP representing major suppliers such as Nintendo Canada and PepsiCo Canada, said Ms. Vierhuis puts a face to the plight of many of Target's small suppliers who are owed money.
"Vulnerable small businesses are going to be hurt deeply and so are the people who own and run them," said Mr. Brzezinski, who is taking on Ms. Vierhuis's case free of charge. "We have to understand the face of some of these victims are more than just large corporations that can, quite frankly, afford it."