On October 29, 2019, the Ontario Superior Court of Justice (Commercial List) (the “Court”) sanctioned Payless ShoeSource Canada Inc., Payless ShoeSource Canada GP Inc. and Payless ShoeSource Canada LP’s (the “Payless Canada Entities”) First Amended and Restated Plan of Compromise and Arrangement (the “CCAA Plan”) in the Payless Canada Entities’ proceedings under the Companies’ Creditors Arrangement Act (“CCAA”). The CCAA Plan was overwhelmingly supported by the creditors of the Payless Canada Entities, with 98% of the Payless Canada Entities’ general unsecured creditors and 98% of the Payless Canada Entities’ landlords who voted in support of the CCAA Plan.
The Court’s sanction of the CCAA Plan follows the approval of a parallel plan in the United States (“U.S. Plan”) by the United States Bankruptcy Court for the Eastern District of Missouri. Although the Payless Canada Entities are debtors in the U.S. proceedings, they are not proponents of the U.S. Plan. The CCAA Plan and the U.S. Plan’s similar treatment of unsecured creditors is the product of negotiations amongst relevant stakeholders to ensure equitable treatment of unsecured creditors on both sides of the border. Among other things, the CCAA Plan provides that general unsecured creditors who are former employees of the Payless Canada Entities and eligible to recover under the Wage Earner Protection Program Act (“WEPPA”), will have their distributions paid to a Receiver to facilitate receivership proceedings. The receivership proceedings will trigger the provisions of WEPPA and allow former employees to access additional government funds.
The Payless Canada Entities are working towards implementation of the CCAA Plan, which is expected to occur before December 31, 2019, subject to certain conditions being satisfied.
Cassels is acting for the Payless Canada Entities in its CCAA proceedings with a team that includes Ryan Jacobs, Jane Dietrich, Natalie Levine, John Birch, Monique Sassi and Taschina Ashmeade (Restructuring and Insolvency), Michael Wunder, Carla Potter and Winda Fung (Financial Services), Jeffrey Roy (Securities), Jim Morand (Tax), Kristin Taylor and Maria Constantine (Employment), Jonathan Freeman, Ardy Mohajer, Kwaku Tabi and Lucas Blair (Real Estate), and Gord Goodman (Insurance).