A trolly stands outside a Target store in Toronto on Thursday January 15 2015. The retail chain announced that it was pulling out of Canada after two years.Chris Young
Insolvent U.S. discounter Target Corp. will ask court next week for a three-month extension of its protection from its creditors – until May 15 – as it winds down its retail operations here.
Target already has pulled mobile phone products from its 133 Canadian outlets and closed Starbucks cafés in them, according to a filing on Friday with the Ontario Superior Court of Justice. Soon it will begin liquidation sales and set up a data room for would-be buyers of its store leases to try to collect whatever value is left in the business, the documents say.
Since being granted court protection on Jan. 15, Target has been working to stabilize the business, says Mark Wong, general counsel for Target Canada.
"However, numerous issues continue to arise on a daily basis which require the urgent attention of the remaining management team," Mr. Wong says in an affidavit.
Two weeks ago, Target stunned the industry by saying its was packing up and leaving Canada after less than two years here, having invested $7-billion in this country but not anticipating to make a profit until at least five years.
It is letting go its 17,600 employees and setting up a trust fund for them – and is now ready to increase it to $90-million from the $70-million initially contemplated, according to the court documents.
Target made its first contribution of $52.2-million to the employee trust fund, Mr. Wong said.
He said Target agreed with Glentel Inc., which ran its mobile phone business, to end it contract. Glentel has already; removed its inventory from all 133 Target stores here. And by Jan. 23, all Starbucks cafes closed in Target stores.
Three liquidators have been chosen to sell off Target's inventory: Merchant Retail Solutions ULC, Gordon Brothers Canada ULC and GA Retail Canada ULC, the documents say.
"No signs shall advertise the sale as a 'going-out-of-business' or 'bankruptcy' sale," Mr. Wong said.
The stores are expected to close by May 15 but many of them may shut "well before" then, he said. Target's lawyers will ask for the court protection extension on Feb. 4.
Editor's Note: An earlier version of this story said Target had requested a two-month extension. It was, in fact, three months. This version has been updated