Forever XXI ULC

CCAA

Page last updated: August 25, 2020

This page is for information purposes only and you should consult your professional adviser if you have any questions or are uncertain as to your rights or obligations.


On September 29, 2019 (the “Filing Date”) Forever XXI ULC (“Forever 21”, “F21 Canada”, or also referred to as the “Company” or the “Applicant”) applied for and received an order (the “Initial Order”) for protection pursuant to the Companies’ Creditors Arrangement Act (“CCAA”), R.S.C.1985, c.C-36, as amended, from the Ontario Superior Court of Justice Commercial List (the “Court”). The Initial Order includes among other things, a stay of proceedings against the Company, and the appointment of PricewaterhouseCoopers Inc., LIT as monitor of the Applicant (“PwC” or the “Monitor”).

The Initial Order, among other things:

  1. Granted a stay of proceedings up to and including October 29, 2019 (“Stay Period”);
  2. Authorized the Company to continue to utilize the central cash management system currently in place, as described in the affidavit of Brad Sell, sworn September 29, 2019 (the “Sell Affidavit”), or replace it with another substantially similar central cash management system (the “Cash Management System”);
  3. Permitted the Applicant to proceed with an orderly wind-down of its business;
  4. Approved the Employee Retention Plan (the “ERP”), as described in the Sell Affidavit and authorized payment contemplated by the ERP, up to $250,000;
  5. Granted a first ranking charge, in the amount of $750,000 (the “Administration Charge”), over all of the property of the Applicant, as security for fees and disbursements of the Monitor, counsel to the Monitor, counsel to the Applicant and Alvarez & Marsal Canada Inc., in its capacity as financial advisor (the “Financial Advisor”) to the Applicant; and
  6. Granted a second ranking charge, in the amount of $3,000,000 (the “Directors’ Charge”), over all of the property of the Company, as security for the indemnity granted to the Applicant’s directors and officers.

In accordance with section 23 (1)(ii)(b) of the CCAA and the Initial Order, on October 4, 2019, a notice was sent to every known creditor of the Applicant who has a claim against the Company of more than $1,000. A copy of the notice is posted on the Notices and List of Creditors subpage.


Status of file as of August 24, 2020

On August 21, 2020, pursuant to Section 8.2 of the Plan and paragraph 9 of the Sanction and Vesting Order, the Monitor delivered the Monitor’s Certificate (the “Monitor’s Certificate”) to the counsel of F21 Canada, advising that on August 21, 2020 F21 Canada implemented the Plan and that the Plan is now effective in accordance with its terms and the terms of the Sanction and Vesting Order.

Status of file as of August 4, 2020

On August 4, 2020, the Court issued the Sanction and Vesting Order which, among other things:

  1. Sanctioned and approved the Plan pursuant to section 6 of the CCAA;
  2. Declared that any claims for an Undelivered Distribution (as defined in the Plan) must be made before November 20, 2020 (the “Distribution Notification Deadline”) and as at such date, the Claims of any Creditors with respect to Undelivered Distributions shall be forever discharged and barred, without any compensation; and
  3. Declared that neither the Monitor nor F21 Canada shall have any obligation to attempt to locate any Affected Creditor with Undelivered Distribution.

All capitalized terms not otherwise defined have the meaning given to them in the Plan.

Status of file as of July 29, 2020

On July 27, 2002, the Monitor filed its Eighth Report (the Eighth Report”) with the Court to provide the Court with information concerning:

  1. The activities of F21 Canada and the Monitor since the date of the Seventh Report;
  2. An update on the results of the Claims Process to date;
  3. The results of the virtual Creditors’ Meeting held on July 21, 2020; 
  4. The Monitor’s views with respect to F21 Canada’s request for the Sanction and Vesting Order sanctioning the Plan; and 
  5. F21 Canada’s actual cash flows for the period ending July 18, 2020 compared to the Claims Process Forecast, as included in the Sixth Report.

The motion for the Sanction and Vesting Order will be heard on August 4, 2020.

Status of file as of July 21, 2020

On July 21, 2020 the virtual Creditors’ Meeting was held to consider and vote on the Plan.

The resolution (the “Plan Resolution”) approving the Plan pursuant to the CCAA was approved by 98% in number of Affected Creditors who represent 99% in value of the eligible voting claims of Affected Creditors who were present and voted at the Creditor’ Meeting. This approval represents a “Required Majority” under the Plan.

F21 Canada intends to seek an order from the Court sanctioning and approving the Plan (the “Sanction and Vesting Order”) at a hearing scheduled to take place on August 4, 2020. Implementation of the Plan is subject to receipt of the Sanction Order and the satisfaction or waiver of certain other conditions precedent set out in the Plan.

Status of file as of July 10, 2020

On July 10, 2020, the Monitor files its Seventh Report (the “Seventh Report”) with the Court to provide the Court with the information concerning:

  1. The activities of F21 Canada and the Monitor since the date of the Sixth Report;
  2. An update on the Claims Process to date;
  3. The Monitor’s views on the Plan; and
  4. F21 Canada’s actual cash flows for the period ending June 27, 2020 compared to the Claims Process Forecast.

Status update as of May 28, 2020

On May 28, 2020, the Court issued the Claims Procedure Order and the Meeting Order, which among other things:

  1. Approved the Claims Process for the identification and quantification of certain claims against F21 Canada and the current and former directors and officers of F21 Canada;
  2. Accepted the filing of F21 Canada’s Plan;
  3. Authorized F21 Canada to call, hold and conduct a virtual Creditors’ Meeting of the Affected Creditors to consider and vote on a resolution to approve the Plan, which will be held on July 21, 2020;
  4. Approved the procedures to be followed with respect to the Creditors’ Meeting;
  5. Set the date for the hearing of F21 Canada’s motion seeking sanction of the Plan for August 4, 2020, should the Plan be approved by the required majority at the Creditors’ Meeting; and
  6. Extended the Stay Period to October 31, 2020.

Further information related to the Claims Process and virtual Creditor’s Meeting will be available on this website before June 2, 2020.

Status update as of May 25, 2020

On May 25, 2020, the Monitor filed its Sixth Report (the “Sixth Report’) with the Court to provide the Court with information concerning:

  1. The activities of F21 Canada and the Monitor since the date of the Fifth Report;
  2. F21 Canada’s actual cash flows for the 4-week period ending May 16, 2020 compared to the Revised Cash Flow Statement;
  3. The Claims Process Forecast (as defined in the Sixth Report) to October 31, 2020;
  4. The Monitor’s conclusions with respect to the Claims Process Forecast;
  5. The Monitor’s views on the claims procedures order (the “Claims Procedure Order”);
  6. The Monitor’s views on the meeting order (the “Meeting Order”) regarding the proposed meeting of creditors to be held on July 21, 2020 (the “Creditors’ Meeting”);
  7. A summary of the proposed plan of compromise and arrangement (the “Plan”); and
  8. The Monitor’s views on F21 Canada’s request for approval of an extension of the

Stay Period to and including October 31, 2020.

The motion will be heard on May 28, 2020.

Status update as of May 22, 2020

On May 21, 2020, the Company filed a motion for

  1. An order (the “Claims Procedure Order”), among other things, establishing a procedure for the identification and quantification of certain claims against F21 Canada and the current and former directors and officers of F21 Canada (the “Claims Process”); and
  2. An order (the “Meeting Order”), among other things

a.    accepting the filing of F21 Canada’s proposed plan of compromise and arrangement, dated May 28, 2020 (the “Plan”);

b.    authorizing F21 Canada to establish one class of Affected Creditors (defined in the Meeting Order) for the purpose of considering and voting on the Plan;

c.    authorizing F21 Canada to call, hold and conduct a virtual meeting of the Affected Creditors (the “Creditors’ Meeting”) to consider and vote on a resolution to approve the Plan;

d.    approving the procedures to be followed with respect to the Creditors’ Meeting;

e.    setting the date for the hearing of F21 Canada’s motion seeking sanction of the Plan, should the Plan be approved by the required majority at the Creditors’ Meeting; and

f.     extending the stay of proceedings to October 31, 2020.

The motion will be heard on May 28, 2020.

Status update as of May 4, 2020

On April 30, 2020, the Court issued an order (the “May Stay Extension Order”) extending the Stay Period until and including May 31, 2020.

Status update as of April 27, 2020

On April 25, 2020, the Monitor filed its Fifth Report (the “Fifth Report”) with the Court to provide the Court with information concerning:

  1. Activities of F21 Canada and the Monitor since the date of the Fourth Report; 
  2. F21 Canada’s actual cash flows for the 15-week period ending April 18, 2020 compared to the Extended Cash Flow Statement;
  3. A revised cash flow statement (the “Revised Cash Flow Statement”) to reflect the requested extension to the Stay Period;
  4. The Monitor’s views on F21 Canada’s request for approval of an extension of the Stay Period to and including May 31, 2020.

On April 24, 2020, the Company filed a motion with the Court to extend the Stay Period until and including May 31, 2020.

The motion will be heard on April 30, 2020.

Status update as of January 21, 2020

On January 21, 2020, the Court issued an order (the "Stay Extension Order") extending the Stay Period until and including April 30, 2020.

Status update as of January 16, 2020

On January 16, 2020, the Monitor filed its Fourth Report (the “Fourth Report”) with the Court to provide the Court with information concerning:

  1. The activities of F21 Canada and the Monitor since the date of the Third Report;
  2. The results of the Realization Process (as defined in the Pre-Filing Report) and F21 Canada’s exit from its store locations;
  3. The implementation of the Lease Termination Agreement and F21 Canada’s exit from the Distribution Centre (as defined in the Third Report);
  4. A summary of the Data Management Plan (as defined in the Fourth Report) implemented by F21 Canada;
  5. F21 Canada’s actual cash flows for the twelve-week period ending January 4, 2020 compared to the Updated Cash Flow Statement, as included in the Second Report;
  6. An extended cash flow statement (the “Extended Cash Flow Statement”) to reflect the extension of the Stay Period and the Monitor’s conclusions with respect to the Extended Cash Flow Statement; and
  7. The Monitor’s views on F21 Canada’s request for approval of the extension of the Stay Period to and including April 30, 2020.

The Applicants' motion will be heard on January 21, 2020.

Status update as of January 15, 2020

On January 14, 2020, the Applicant filed a motion with the Court for an order extending the Stay Period until and including April 30, 2020.

The motion will be heard on January 21, 2020.

Status update as of December 3, 2019

On December 2, 2019, the Court issued the Approval and Vesting Order, which among other things

  1. Approved the Transaction contemplated by the Lease Termination Agreement between F21 Canada, and the Landlord Entities, dated November 21, 2019;
  2. Sealed from the public record confidential appendix “F” to the Third Report until the Monitor files the Monitor’s Certificate with the Court after the closing of the Transaction; and
  3. Amended paragraph 10(a) of the Initial Order to allow it to dispose of redundant or non-material assets not exceeding $300,000 in any one transaction or $1,000,000 in the aggregate.

Status update as of November 27, 2019

On November 27, 2019, the Monitor filed its Third Report (the “Third Report”) with the Court to provide the Court with information concerning:

  1. The activities of F21 Canada and the Monitor since the date of the Second Report;
  2.  F21 Canada’s actual cash flows for the five-week period ending November 16, 2019 compared to the Updated Cash Flow Statement (as defined and included in the Second Report);
  3. The Monitor’s views on F21 Canada’s motion seeking the Approval and Vesting Order, inter alia, approving the lease termination transaction contemplated by the Lease Termination Agreement in respect of the DC Lease (as defined in the Third Report) of the distribution centre at 2450 Hogan Drive in Mississauga, Ontario (the “Distribution Centre”); and
  4. The Monitor’s views on F21 Canada’s proposed arrangements with Infinity Asset Solutions Inc. (“Infinity”), a third party liquidator, to complete the cash sale of certain remaining FF&E (as defined in the Third Report) located at the Distribution Centre, and certain amendments to the Initial Order that F21 Canada seeks in connection with the proposed arrangements with Infinity and certain other transactions that may be necessary to dispose of other remaining and redundant non-material assets.

The motion will be heard on December 2, 2019.

Status update as of November 26, 2019

On November 25, 2019, the Applicant filed a motion for an order (the “Approval and Vesting Order”)

  1. Approving the lease surrender and termination transaction (the “Transaction”) contemplated by a lease termination and settlement agreement (the “Lease Termination Agreement”) between F21 Canada, as Tenant, Orlando Corporation (the “Landlord”), as landlord, Quarre Properties Inc. (the “Registered Owner”) and Orlando Construction Inc. (the “Contractor”, together with the Registered Owner and Landlord, the “Landlord Entities”), dated November 21, 2019;
  2. Temporarily sealing from the public record certain commercially sensitive information; and
  3. Making amendments to paragraph 10(a) of the Initial Order to allow it to dispose of redundant or non-material assets not exceeding $300,000 in any one transaction or $1,000,000 in the aggregate;

The motion will be heard on December 2, 2019.

Status update as of October 23, 2019

On October 22, 2019 the Court issued the Stay Extension Order which among other things extended the Stay Period to and including January 31, 2020.

Status update as of October 18, 2019

On October 18, 2019, the Monitor filed its Second Report (the “Second Report”) with the Court to provide the Court with information concerning:

  1. The activities of F21 Canada since the Filing Date and the Monitor since the First Report;
  2. F21 Canada’s actual cash flow from the Filing Date to October 12, 2019 as compared to the cash flow forecast included in the Pre-Filing Report;
  3. An updated cash flow statement to reflect the Stay Extension; and
  4. The Monitor’s views on F21 Canada’s request for approval of the Stay Extension.

Status update as of October 17, 2019

On October 17, 2019, the Applicant filed a motion for an order (the “Stay Extension Order”) to extend the Stay Period to and including January 31, 2020 (the “Stay Extension”).

Motion will be heard on October 22, 2019.

Status update as of October 7, 2019

On October 7, 2019, the Court issued the Sale Approval Order, which among other things, approved the Consulting Agreement, the Sale Guidelines and authorized F21 Canada, with the assistance of the Consultant, to conduct the sale of its Merchandise and FF&E in accordance with the Sale Approval Order, the Consulting Agreement, and the Sale Guidelines.  

Status update as of October 3, 2019

On October 3, 2019 the Applicant filed a motion for an order (the “Sale Approval Order”), among other things:

  1. Approving, authorizing, and ratifying the Consulting Agreement between a contractual joint venture comprised of Gordon Brothers Canada ULC and Merchant Retail Solutions, ULC (collectively, the “Consultant”) and F21 Canada dated September 27, 2019  (the “Consulting Agreement”), in the form attached as Exhibit “C” to the Affidavit of Bradley H. Sell sworn October 3, 2019, including the sale guidelines attached as Schedule “A” to the proposed Sale Approval Order (the “Sale Guidelines”), and the transactions contemplated thereunder;
  2. Authorizing F21 Canada, with the assistance of the Consultant, to conduct the sale of F21 Canada’s inventory (“Merchandise”) and its furniture, fixtures, and equipment (“FF&E”) in accordance with the proposed Sale Approval Order, the Consulting Agreement, and the Sale Guidelines;
  3. Authorizing F21 Canada to take any and all actions as may be necessary or desirable to implement the Consulting Agreement;
  4. Ordering that the Consultant shall act solely as an independent consultant to F21 Canada and that it shall not be liable for any claims against F21 Canada other than as expressly provided in the Consulting Agreement or Sale Guidelines; and
  5. Ordering that the claims of the Consultant pursuant to the Consulting Agreement shall not be compromised pursuant to any plan of compromise or arrangement involving F21 Canada and that the Consultant shall be treated as an unaffected creditor in these proceedings and under any plan.

The motion will be heard on October 7, 2019.

Also, on October 3, 2019, the Monitor filed its first report (the “First Report”) with the

Court to provide the Court with information concerning:

  1. An update of the Monitor’s activities since the Filing Date;
  2. The liquidator Bid Solicitation Process (as defined in the First Report); and
  3. F21 Canada’s motion for the Sale Approval Order and the Monitor’s conclusions and recommendations in connection with the foregoing.

 

This Web site will be updated as information becomes available.

For more information, please contact: Tammy Muradova, Telephone: +1 888 444 1193, or via Email.

Contact us

Tammy Muradova

Consulting & Deals, PwC Canada

Tel: +1 888 444 1193

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