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KPMG releases second report on TravelBrands

TORONTO — KPMG Inc., the Monitor of TravelBrands Inc. in its CCAA creditor protection proceedings, has completed and filed with the court its second report dated Aug. 13, 2015.

The report’s purpose is to provide an update regarding some of the company’s key stakeholders, the review of the security of the direct parent of TravelBrands, an update on the company’s proposed sales process, the company’s actual receipts and disbursements for the eight-week period ended Aug. 7, 2015 compared to previous forecasts, TravelBrand’s updated cash flow forecast for the period from Aug. 8 to Nov. 6, 2015, the company’s request to extend the Stay Period to Sept. 30, 2015 and the Monitor’s recommendation.

The Monitor confirms the statements made in the Notice of Application dated Aug. 10, 2015 reported by Travelweek earlier this week relating to suppliers and travel agents, IATA, TICO, Bank of Montreal, Sears and the 75 Eglinton Ave. East property.


The Monitor also reports in respect to its review of the general security agreement granted to 2224855 Ontario Inc., the holding company of TravelBrands.

It states that, subject to usual assumptions and qualifications contained in the lawyer’s opinion, the Security Agreement would be valid and enforceable against the bankrupt estate of TravelBrands under the laws of Ontario and B.C., that it has created a valid security interest pursuant to the laws of Ontario and B.C. and that the appropriate registration has been made in all public offices in Ontario and B.C.

The same applies for the Province of Quebec. This appears to mean that in the event that TravelBrands were to become bankrupt then the holding company would have first claim (subject to the Monitor’s claims only) against all the assets of TravelBrands in priority to all unsecured and other creditors to satisfy all amounts of money owed by TravelBrands to the holding company.

The value of TravelBrands’ assets, and the amount owed to the holding company would determine whether there would be anything left over for other creditors.

The report repeated the statement that the Company is considering initiating a sale process for the sale of all of the Company’s assets. It further states that “Given TravelBrands’ progress in its restructuring efforts since the commencement of the CCAA Proceedings, including entering into the Amending Agreement with Sears and the ongoing discussions with respect to a possible settlement between the Company and the Landlord, the Company in consultation with the monitor, is currently considering whether the restructuring could also be achieved by way of a plan of compromise and arrangement which may enable TravelBrands to benefit from the preservation of certain tax attributes.”

It however adds the following proviso “However, as described, above, if a mutually agreeable settlement is not reached between the Company and the Landlord in the short term, TravelBrands will seek this Court’s approval to commence the Sale Process.

The cash flow results and the cash flow forecasts can be reviewed at kpmg.com/Ca/en/services/Advisory/TransactionRestructuring/CreditorlinkSites/TravelBrands/Monitors%20Reports/Second-Report-of-the-Monitor-FINAL.pdf.

The application to extend the stay of proceedings should be heard by the court on Aug. 14, 2015.

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