TravelBrands Is Granted An Extension Of Stay to 30SEPT
UPDATE: TravelBrands Granted Stay To 30SEPT. KPMG confirms that the extension of stay has been granted to TravelBrands and
that the Company has also made significant progress in the discussions with its
landlord at 75 Eglinton. A press release states that "TravelBrands is optimistic that it will be able to reach a
mutually agreeable form of the settlement agreement in the near term."
KPMG Inc., the court-appointed Monitor of TravelBrands Inc. in its CCAA creditor protection proceedings, has issued its second report, in which it recommends that the company be granted a requested extension of protection through 30SEPT.
KPMG offers the following reasons why it believes the extension should be granted:
·TravelBrands continues to operate in the normal course;
·The company has successfully renegotiated its license agreement with Sears;
·The company is working with IATA to address compliance with IATA Financial Covenants;
·The company is continuing to provide periodic reporting to TICO as required;
·The company is working cooperatively with the landlord (of its former Toronto headquarters) and requires additional time to engage in further discussions with the landlord and its counsel towards a mutually agreeable settlement;
·Funding from Red Label pursuant to the Commitment Agreement remains available to the company; although the August Cash Flow Forecast indicates that the Company may not require that funding to satisfy ongoing operating costs during the proposed extension of the Stay Period.
KPMG says that to date, TravelBrands’ suppliers and travel agents have continued to support the company during the CCAA Proceedings. As well, KPMG states: “TravelBrands continues to pay its suppliers for amounts owing for travel goods and services supplied during the CCAA Proceedings. The company has continued to pay travel agents in the ordinary course for services supplied to the company prior to and since the date of the Initial Order.”
TravelBrands achieved one of its objectives in the stay of proceedings process by negotiating a new deal with Sears Travel. The amended agreement means TravelBrands is no longer required to make minimum annual commission payments to Sears, and will share earnings generated by Sears Travel.
For TravelBrands, the main sticking point going forward is negotiating with the landlord of 75 Eglinton Ave. East, a building that has sat mostly empty since November 2013, but cost the company more than $3 million in rent last year alone.
The 20-year lease came with the purchase of Thomas Cook Canada and has almost 15 years remaining. TravelBrands moved all of the employees from the building to its own premises in Mississauga after buying Thomas Cook in 2013.
The company says “some progress” has been made in those talks, but no settlement has been reached. TravelBrands says it will continue its discussions with the landlord in order to facilitate a mutually agreeable settlement, but if such discussions are not successful, TravelBrands could seek approval of a sales process by the court.
Additional information regarding TravelBrand’s CCAA proceedings, including court materials, monitor reports and motions filed, can be found on the KPMG website.