EATON PLAN GETS COURT’S OK
NEW YORK — T. Eaton Co.’s reorganization plan was approved Friday by the Ontario Court of Justice, which scheduled the Toronto-based department store company’s exit from bankruptcy proceedings on or about Oct. 30.
The plan pays 102 cents on the dollar for the claims of unsecured creditors, according to Wilbur Ross, senior managing director at New York’s Rothchild Inc., which represents the largest group of unsecured creditors.
Unsecured creditors had objected to a plan filed in mid-August, which would have paid about 100 cents on the dollar, and they held enough claims to have derailed the company’s reorganization plan.
As a result, Eaton sweetened its offer in a amended plan filed Aug. 27, agreeing to pay interest and legal costs as well as higher rates and shorter maturities on notes handed out under the plan.
The restructuring allows the Eaton family to keep control of the 127-year-old chain and requires that Eaton’s of Canada Ltd., an Eaton family holding company, put at least $50 million in cash into the company.
Eaton’s will be led by George Kosich, who became president and chief executive officer on June 6, after announcing in April that he would retire as chairman and ceo of Hudson’s Bay Co. Hudson’s Bay is another Toronto-based operator of department stores, called The Bay, and Zellers discount stores.
As part of its reorganization, Eaton’s is closing 17 stores. It plans to keep 67 department stores, one home furnishings unit and two warehouse stores. Six stores were closed in June, another unit will close this month, and 10 more will go dark in February.
Eaton’s, in bankruptcy proceedings since Feb. 27, lost $87.6 million ($120 million Canadian) last year on sales of $1.17 billion (C$1.6 billion).