TravelBrands applies to court for further extension to Dec. 11 and approval for plan

Posted on 09/22/2015

TORONTO — TravelBrands yesterday made an application to the Ontario Superior Court of Justice for a further extension of the Stay Period to Dec. 11, 2015, for acceptance of its proposed plan under the Companies’ Creditors Arrangement Act of Canada.
TravelBrands wants to hold a meeting of creditors to approve the plan and to implement a claims procedure process for known and unknown creditors. The application is scheduled to be heard on Sept. 28, 2015. The application confirms that TravelBrands continues discussions with IATA and has extended its letter of credit currently in the amount of $5.08 million to Oct. 31, 2015 to meet IATA’s current financial requirements. It states that TravelBrands has entered into an agreement with Sears amending the original agreement which includes provisions for a release of actual or potential claims against TravelBrands. As to the 75 Eglinton Ave. East property, it confirms that TravelBrands and the landlord have made a decision to enter into a settelement and that they expect to enter into a formal agreement in the near term. As part of this contemplated agreement, the landlord will agree to support the plan or any other plan of arrangement or compromise proposed by TravelBrands that provides terms consistent with the settlement. Based on the above, TravelBrands in consultation with the Monitor has decided to proceed by way of a plan of compromise or arrangement which will include the following recoveries to creditors: Unsecured creditors with claims not exceeding $15,000 would be paid in cash for the full value of their claims within two days of the implementation of the plan. Other affected unsecured creditors would receive the full value of their allowed claims in two installments (60% on Jan. 31, 2016 and the remainder on Nov. 30, 2016). The plan provides for a subset of Deemed Proven Claims including the landlord’s and Sears’ claims whereby both Sears and the landlord will be deemed to have waived their right to what they otherwise would have received under the plan. If the plan is not approved by the required majority of creditors then TravelBrands will revoke the plan and Holdco, TravelBrands’ holding company, will seek the Court’s approval of a credit bid for the purchase of substantially all of TravelBrands’ assets. Presumably, unsecured creditors would get nothing under this scenario. The proposed procedure for a creditor’s meeting to approve the plan and for processing claims includes special provisions for represented travel trade creditors comprised of various hotels which are counter-parties to agreements with TravelBrands to overcome the fact that TravelBrands’ agreements are with Travel Trade Creditor Representatives, rather than individual hotels and other service providers located across the world. The proposed date for the meeting of creditors is Oct. 30, 2015. However, the proposed extension to the Stay Period is to Dec. 11, 2015 to allow for the completion of the claims process and to allow for the holding of the meeting. The application comprises 288 pages and includes the affidavit of Francesco DeMarinis sworn on Sept. 21, 2015 and the various proposed orders to authorize all the steps required to complete the process. A third report of the Monitor will be filed with the court presumably before Sept. 28, 2015. Travelweek will report again as these matters evolve