TravelBrands gets second extension of stay

TravelBrands has been granted an extension to the stay of proceedings until Sept. 30, requested by the company last week.

According to a statement from TravelBrands, the extension was granted in the Ontario Superior Court of Justice on Aug .14. In its reasoning for the extension, KPMG (TravelBrands’ court-appointed monitor for the restructuring process) cited TravelBrands’ continued normal operations and the successful renegotiation of its licence agreement with Sears. The company is continuing to work with IATA to "address compliance with the IATA Financial Covenants” and with the landlord at TravelBrands’ former headquarters at 75 Eglinton Ave. East in Toronto to reach a “mutually agreeable” settlement.

KPMG also posted its second report on the company on Aug. 13, which includes updates on discussions with key stakeholders, the company’s proposed sales process and cash flow forecast for Aug. 8 to Nov. 6.

According to the report, TravelBrands "continues to be in discussions with its critical suppliers and key agents, as required in order to ensure that there is no disruption in the supply of travel services and no impact on TravelBrands’ customers." In addition, the company continues to pay its suppliers and travel agents for amounts owed since the date of the Initial Order.

TravelBrands and KPMG continue to provide the Travel Industry of Ontario with regular weekly financial and other reporting since the commencement of the CCAA Proceedings as part of the monitoring regime implemented by TICO.

Shedding light on more details regarding the Sears agreement, the report states that TravelBrands is no longer required to make minimum annual commission payments to Sears, Sears Travel earnings will be shared by TravelBrands and Sears, and finally, TravelBrands and Sears "granted each other conditional releases from liabilities arising prior to the date of the Amending Agreement; and that a special purpose bank account has been established, which Sears will administer as trustee for the benefit of Sears and the Company."

With all of this in mind, the monitor has concluded that he agreement mitigates the negative financial impact of TravelBrands’ existing license agreement with Sears, allowing the company to continue to operating the Sears Travel business going forward, as PAX previously reported.

As for the outstanding issue of the lease at 75 Eglinton East, TravelBrands says it has made “significant progress in the discussions with its landlord" and is "optimistic" that it will be able to reach a settlement agreement in the near term. 

However, as pointed out in the latest report, if such an agreement is not made in the short term, "that may determine whether the Company seeks approval of the sales process or seeks to present a plan of compromise or arrangement to its creditors."

The report and other related documents can be found here.