On Jan. 23, Target made the decision to close all of its 133 stores across Canada, which will put nearly 17,600 people out of work. Far from simply hurting our already weak economy in Southern Ontario, Target has seemingly runup billions of dollars to various creditors ranging from business-owed money to outstanding rent payments owed on Target’s infamous gigantic stores.
According to a new 45-page document published in the U.S, Target has various debts, with the total exceeding over $5 billion to multiple business and municipal governments and other corporations that target had made deals with in its short two years of corporate life in Canada.
Target has additionally filed for bankruptcy under the company’s Credit Arrangement Act in Ontario on Jan. 22, making it seem unrealistic that all of the $5 billion would be repaid any time soon.
“It’s got to be one of the bigger ones, in terms of the size of the debt,” a lawyer working on the case commented, requesting to not be named due to her involvement. It is thought that due to the sheer debt of Target, that its closing could possibly be the largest bankruptcy in all of Canadian history according to various experts within the retail industry.
As for whom these people are that Target owes over $5 billion dollars to, the list seems endless. Hillcrest Management Inc., a private property company based in Ontario is owed nearly $1.7 million.
According to the International Business Times, other debts include:
- Acklands Grainger, owed $46,624
- Bison Transport, owed $846,216
- CAMAC, owed $6,150;
- Campbell Company of Canada, owed $184,407
- Charles Scerbo Drugs Ltd., owed $10,369
- City of Winnipeg, owed $14,153
- Clinix Pharmacy Ltd., owed $3,399
- Industrial Truck Service, owed $8,660
- Manitoba Finance-Taxation division, owed $1,003,130
- Nygard International, owed $26,615
- Old Dutch Foods Ltd., owed $219,661
- Transx Ltd., owed $455,016
- Trustncare Pharmacy Ltd., owed $12,223.
In addition to corporations reporting massive debt, The Canada Revenue Agency and provincial governments are also owed copious amounts of money. According to the CRA, Target owes upwards of $12 million in back-paid taxes and other fees, as well as owing $2.6 million and $6.5 million to B.C. and Quebec respectively.
In response to this, Vanessa Ibe, a lawyer at Toronto-based Rosenbaum & Frank, remarked in an press release that, “You change your customers HST on behalf of the government; with the idea you’re supposed to remit that over”. However, due to the long-drawn-out process of bankruptcy, all payments owed to various corporations are put on indefinite hiatus until a judge can approve a repayment plan. Allegedly, Target is listing its value of assets as being approximately the same as its total liabilities, having over 137 store leases as well as huge surpluses of merchandise and real-estate holdings.
According to various sources, the proceeds of this will go to paying off much of Target’s debt, despite scepticism that targets physical assets will be enough.
The CRA has stated that Target’s lawyers have until sometime in February to file the details in regards to how Target will pay its debt.
Hopefully Target learned its lesson. In Canada, when you play the game of mega-stores you either win or you die (unless you are Walmart).