MISSISSAUGA, ON – With the June 26 deadline for the stay period previously ordered by the Ontario Superior Court of Justice fast approaching, TravelBrands made an application to the court to extend the stay period until Aug. 17, 2015 and the court agreed to the extension.
The application was supported by various materials providing additional information including the affidavit of Joe DeMarinis, Co-Chief Executive Officer of TravelBrands Inc. sworn on June 18 and the first report of the Monitor, KPMG Inc. dated June 23 in which the Monitor recommended that the court grant TravelBrand’s request for an extension.
The three documents were posted on the KPMG website dedicated to the TravelBrands proceedings late last week. The documents together outline what has transpired since May 27 and what they expect will happen during the extension period.
In respect to TravelBrands’ ongoing business DeMarinis and the Monitor advise that since the granting of the initial court order there has been no cessation of business nor is that contemplated. The company’s business continues in accordance with the terms of the initial court order and under the supervision of the Monitor.
DeMarinis further advises that the company’s financial performance has been “consistent with expectations” and that “the company continues to operate within its cash flow forecast and has not had to draw under the Commitment Agreement”. He further advises that since the date of the initial court order no employees have been laid off and warns that the company will continue to look for synergies and will adjust staffing levels accordingly.
In regard to the company’s relationship with key agents, DeMarinis advised that TravelBrands continues to pay its key agents pre-filing and post-filing amounts in the normal course. It continues to deal with its critical suppliers on an as needed basis to ensure that there will be no disruption in services to its customers. He adds that “TravelBrands’ most significant suppliers have continued to supply goods to the company and, as provided for in the Initial Order, TravelBrands has and continues to pay its suppliers amounts owing for goods and services supplied to the company during the CCAA proceedings”.
No mention is made in any of the documents filed as to the fate of the other creditors of TravelBrands at the time of the filing. Apparently, their fate remains to be decided.
As to the matter of 75 Eglinton Ave. East, both the company and the Monitor have engaged in discussions with the landlord of the building and its lawyers. As reported earlier by Travelweek, on May 29, the company with the consent of the Monitor delivered a disclaimer notice to the landlord purporting to terminate the lease effective June 29, 2015. Since then, the parties have continued to engage in discussions to determine a mutually satisfactory result.
DeMarinis advises that the objection period for the landlord to dispute the notice of disclaimer ended on June 13, 2015 and goes on to advise as to the various agreements made between the parties empowering the landlord to deal directly with prospective tenants and existing subtenants.
None of the documents referred to above give any indication as to whether the landlord did file a dispute or whether the lease was in fact terminated on June 29, 2015 and more importantly whether this issue has in fact now been resolved. This has apparently been a key issue since the beginning.
In the initial application, TravelBrands anticipated that it might also disclaim the Amended Sears Agreement in an effort to terminate the agreement due to the significant financial strain that imposed on the company. DeMarinis advises that as part of the discussions with Sears, TravelBrands agreed to defer issuing a disclaimer notice to Sears in return for Sears agreeing to waive daily amounts accruing due under the agreement.
DeMarinis indicates that the parties will “continue discussing innovative solutions in an effort to reach a possible resolution whereby the parties can continue their business arrangement”.
DeMarinis’ also advises that the company continues to develop a sales process to sell the assets and undertaking of the company. He indicates that this process is expected to include bidding procedures that include a ‘stalking horse’ bid from the parent company of TravelBrands and that they are presently working on this stalking horse bid. He advises that the company needs more time to focus on and finalize the sale process. And that the company expects to be before the Court in early July to seek approval for what he describes as the ‘Stalking Horses APA’ and related bidding procedures.
Finally, DeMarinis states that the company seeks an extension of the stay period up Aug. 17, 2015 to allow for the continued operation of the company and for the company to continue to develop and implement a restructuring plan, including the development of a sale process and to continue discussion with its stakeholders. An updated cash flow forecast for the 13-week period from June 13 to Sept. 11 is attached to the Monitor’s Report as Appendix F.
According to DeMarinis this forecast shows that “with the Commitment Agreement, TravelBrands has sufficient liquidity to fund operations during the requested extension of the Stay Period”.
Travelweek has been advised by representatives of TravelBrands that the court did grant the extension of the stay to August 17, 2015 in accordance with the terms of the draft order accompanying the application.
The three documents include further information regarding the dealings between the company and various regulators and stakeholders. For further analysis and details regarding these matters, go to travelweek.ca.
To review the actual documents go to www.kpmg.com/ca/Travelbrands