Tabi operated a retail clothing store chain with 107 leased locations in malls in all Canadian provinces, except Quebec. Tabi’s business consists of the sale of women’s clothing and related accessories.
In January 2010, in response to financial difficulties being experienced by Tabi, its US based bankers called their loans. A private secured lender took an assignment of the bank’s debt and security and engaged Farber to assist with the restructuring of its operations.
Filing of a Proposal under the Bankruptcy & Insolvency Act (“BIA Proposal”) was necessary to impose a stay of proceedings to allow the company with time to commence its operational restructuring and make a proposal to its pre-filing creditors.
Through this process, the company restructured its balance sheet, implemented its restructuring plans under the leadership of its Chief Restructuring Officer, which included a downsizing of the operations and disclaimer of non-profitable real estate leases.
Farber presented the Company’s proposal to creditors and this was approved by the creditors and the Court.
About one-year later, despite the prior restructuring efforts, the Company was still under-performing. The private secured lender/equity withdrew its financial support to the Company necessity a second urgent filing under the BIA. It was determined that a liquidation of inventory, fixtures and IP assets was the best approach for maximizing returns to the Company’s asset-based lender, equity/debt-holder, employees, landlords etc.
Debtor-in-possession (DIP) financing was arranged as a critical ingredient of the liquidation plan. A liquidator was selected to assist with the orderly in-store liquidation at the remaining 70 locations. The liquidation was successful resulting in good recoveries to the secured lenders.
Allan Nackan is a Partner at Farber and co-leads the firm’s Restructuring practice. His practice focuses on corporate insolvency and restructuring, financial advisory services, cross-border restructuring, fraud investigations and forensic accounting. Allan can be reached at 416.496.3732 and firstname.lastname@example.org.