All about Mastermind Toys Bankruptcy
Mastermind Toys has received the go ahead from the Ontario Court of Justice to initiate creditor protection. Creditor protection enables Mastermind to strategically revamp its operations to overcome present business obstacles and re-establish its footing.
During the Companies’ Creditors Arrangement Act proceedings, Mastermind Toys plans to keep all 66 locations open. According to the filing, Mastermind is set to shut down certain “underperforming” stores while simultaneously investigating alternate business options. It appears that negotiations are rapidly progressing with an undisclosed buyer interested in acquiring the company. If the deal with the potential buyer materializes, there are plans to conduct a holiday sale at the operational stores. However, if the deal falls through, Mastermind Entities will be forced into a full-scale liquidation of all 66 retail locations.
How Is Mastermind Responding to Economic Challenges & Potential Bankruptcy?
Mastermind said that the decision to file creditor protection was a difficult by necessary” decision. Founded by brothers Andy and John Levy in 1984, Mastermind’s current financial difficulties resulted from increasing competition, the Covid-19 pandemic impact, and the recent difficult economic environment. Cost reductions, operational improvements, an extensive strategic review, and a robust sales process were not enough to overcome the challenges facing the company.
Presently, Mastermind is dealing with substantial debt. CIBC, a secured creditor, holds $25.7 million in debt. Unsecured creditors are owned much more: $22.2 million to merchandise vendors, $2.6 billion to logistics and other vendors, and about $5.6 million in gift card liabilities. The recovery of these outstanding amounts by unsecured creditors may prove challenging.
How can Whitten & Lublin help?
Bankruptcy does not excuse employers from paying severance and unpaid wages owed to employees. However, the reality may be very unpleasant for employees in these circumstances. An employee becomes an unsecured creditor to its bankrupt employer, and must get in line behind other creditors, such as taxes owed to the government and debts held by secured creditors like banks, who are also needing to be paid, and as secured creditors will be paid first.
If you or someone you know is dealing with a bankrupt employer, it is important to speak with an experienced employment lawyer to understand your workplace rights. The employment lawyers at Whitten & Lublin can help you navigate your legal options regarding your specific circumstances. If you are looking for employment lawyers and would like more information about what Whitten & Lublin can do for you, please contact us online or by phone at (416) 640-2667.