TORONTO — KPMG Inc. has released its third report as the TravelBrands monitor dated Sept. 24, 2015.
The stated purposes for the report were to provide an updated on the financial performance of TravelBrands, to provide an overview of the plan or arrangement proposed by TravelBrands, an overview or TravelBrands’ proposed process for dealing with determining creditors’ claims and its proposed procedure for the conduct and administration to the proposed Oct. 30, 2015 creditors’ meeting, an update on certain matters and an update regarding TravelBrands’ application for an extension of the Stay Period.
The report restated and confirmed many of the statements set out in the affidavit of Francesco DeMarinis sworn on Sept. 21, 2015 and reported by Travelweek last week.
According to the monitor, the company as of Aug. 31, 2015 had assets with a net book value of $122.2 million and liabilities of $182.8 million including a secured liability owed to its parent company of $71.7 million. Since May 2013 when Red Label acquired Thomas Cook Canada, TravelBrands’ revenues have remained relatively unchanged or declined for the majority of the company’s banners while margins across all divisions have been reduced.
The company continues to have sufficient liquidity to fund operations without a draw on funds available under Red Label to provide up to a $4 million loan. Senior management of the company has advised the monitor that further funding from Red Label will not be necessary to meet the working capital requirements imposed by TICO, IATA and the Bank of Montreal.
The monitor further states its understanding that during the period from Sept. 19, 2015 and Dec. 11, 2015, TravelBrands will continue to make payments for goods and services supplied post-filing and it expects that TravelBrands will continue to pay all amounts, whether incurred pre or post filing owing to travel agents and with the consent of the monitor and Red Label certain pre-filing payments to key suppliers that the company considers to be critical to its business.
The monitor continues by summarizing the key terms of the plan presented by TravelBrands (full details are posted on the monitor’s website for these CCAA proceedings and are set out in the draft orders comprising the record for the upcoming court proceedings on Sept. 28, 2015).
As reported previously by Travelweek, each creditor having an undisputed affected claim of less than $15,000 will be paid in full shortly after the Plan Implementation Date. The Landlord of the 75 Eglinton Ave. East property and Sears will receive distributions in accordance with the terms of their respective settlement agreements. All other undisputed affected creditors will receive 60% of their respective claims no later than Jan. 31, 2016 and the balance no later than Nov. 30, 2016.
Trade creditors total over $11 million, employee claims are approximately $786,000, the Sears claim is over $6 million and the claim of the Landlord of 75 Eglinton Ave. East, is $15 million.
The plan must be approved by a majority of affected creditors representing at least two-thirds in value of the voting claims of affected creditors. The report sets out a proposed timeline for the claims process and the meeting procedure that TravelBrands will ask the Court to approve.
In satisfaction of its legal obligation, the monitor states it is of the view that “the plan is more beneficial to the company’s creditors and other stakeholders and offers the company’s creditors with greater certainty and given the anticipated distributions under the plan, likely a far more favourable recovery than the Sale Process”. The monitor further advises that in its view, a bankruptcy of the company would provide limited recovery to the company’s creditors.
The monitor concludes its report by recommending that the affected creditors of the company vote in favour of the plan, that the court approve the proposed claims procedure and meeting procedure and grant the requested the extension of the Stay procedure.
The court will consider these matters and make its decision on Sept. 28, 2015 at which time, the major creditors and stakeholders who have appeared in the court proceedings will be given the opportunity to present their respective position in regards to these matters.