Target's road out of Canada becomes clearer

Target Corp.'s road map out of Canada became more clear this week as it selected liquidators, increased the fund to pay soon-to-be-unemployed Canadian workers and continued sorting out what to do with American executives who were sent up north.

Liquidation sales at Target Canada's 133 stores could begin next week if a Toronto court gives the go-ahead on a plan to wind down its operations.

Target Canada has already selected three liquidators to oversee the process, including the firms that handled the going-out-of-business sales of retailers Circuit City and Borders.

A motion to approve the liquidation plan as well as to get the ball rolling on selling store leases is scheduled to be heard on Wednesday in Ontario Superior Court.

In a court affidavit filed this week, Mark Wong, Target Canada's general counsel and secretary, said that some stores are likely to be shuttered by the end of March, with the rest closing by May 15.

He also said that Target will increase its contribution toward an employee trust it has set up for its 17,000-plus workers in Canada who will soon be out of jobs to ensure they receive 16 weeks of pay after the recent notification that their jobs are being terminated. While the company had initially said it would put 70 million Canadian dollars into that trust, it now plans to boost that to 90 million Canadian dollars.

Many employees will have to work part or most of those 16 weeks in order to receive that money.

Molly Snyder, a Target spokeswoman, said the Minneapolis-based retailer will also pay to move about 70 American employees who had been assigned to work in Canada back to the Twin Cities. It is not yet clear how many will retain jobs with Target. She added that the company will evaluate their roles and the needs of the business on an case-by-case basis.

The jobs of another 600 workers in the Twin Cities headquarters, people who worked with the Canadian business, are hanging in the balance. Target is also evaluating the fate of another 200 employees in India who supported the Canadian division.

Target announced two weeks ago that it would close in Canada after racking up more than $2 billion in losses in the less than two years since moving into the country, in its first international foray. The Canadian stores, which were plagued with stocking and pricing issues, would not turn a profit for at least another six years and were draining resources from the U.S. parent, the company said.

As part of its exit, Target Canada has sought the equivalent of bankruptcy protection in the Canadian courts. During the hearing next Wednesday, Target Canada will also ask a judge to extend its stay of protection from its creditors three months to May 15 when the sale of its leases and liquidation sales should be completed.

Target Canada solicited bids from a handful of liquidators and ended up selecting a proposal by a joint venture of Merchant Retail Solutions, Gordon Brothers Canada and GA Retail Canada. The liquidation sales could begin within a day of the court's approval, according to court documents.

The agreement with liquidators includes a clause that says none of the liquidation signs will say "bankruptcy" or "going out of business."

The Starbucks-branded cafes in Target Canada's stores have closed. Mobile phone kiosks run by Glentel have also been removed.

The company's Canadian headquarters in Mississauga, outside of Toronto, where 800 employees once worked, are "now operating with a reduced team," Wong said in the affidavit.

That office is expected to close by March 31 and Target Canada's three distribution centers by April 30.

Kavita Kumar • 612-673-4113