Connect with us


Sears bankruptcy raises old questions about cost of going broke





WILMINGTON, Del. (Reuters) – Sears has survived the Great Depression and world wars. Whether the 126-year-old retailer stays afloat or goes out of business now hinges in part on paying for the enormous bill piled up by going broke.

FILE PHOTO: A dismantled sign sits leaning outside a Sears department store one day after it closed as part of multiple store closures by Sears Holdings Corp in the United States in Nanuet, New York, U.S., January 7, 2019. REUTERS/Mike Segar/File Photo

The fate of Sears Holdings Corp (SHLDQ.PK) highlights a harsh reality of U.S. bankruptcy – it requires armies of pricey specialists in a system driven by an outcome, not costs.

On Monday, Sears will consider bids for its assets, including a last-ditch $5 billion proposal by chairman and controlling shareholder Eddie Lampert.

To ensure his chances of outbidding proposals to liquidate the chain, Lampert last week agreed to assume more than $600 million in additional liabilities that Sears has incurred since filing for bankruptcy protection last October.

Those so-called administrative claims includes taxes, and payments to vendors and the professionals advising Sears.

    “The fees in a case like this will be tremendous, you’ve got people working round the clock,” said David Wander, bankruptcy attorney at Davidoff Hutcher & Citron. “A massive case requires a massive amount of legal talent.”

Sears, which also owns the Kmart discount chain, is picking up the tab for six law firms, three investment banks, two financial advisers and seven others that are providing tax, real estate advice and other services, according to court filings.

Although the final tally will not be known until the case ends, the fees mount quickly.

The law firm of Weil, Gotshal & Manges, for example, billed Sears about $5 million for the first two weeks after it filed for Chapter 11 bankruptcy protection on Oct. 15, according to court documents.

Weil did not respond to a request for comment. Sears declined to comment.

Bankruptcy veterans said the fees reflect the realities of Chapter 11, which can inflate costs: only a handful of law firms can put scores of experienced staff on a case on short notice. Corporate leaders are happy to pay top dollar when the company’s survival is on the line.

The 2008 bankruptcy of investment bank Lehman Brothers Holdings Inc has been the costliest case by far, surpassing $2 billion, and large failures such as Enron Corp in 2001 typically run up bills of hundreds of millions of dollars.

Since lawyers and other advisers generally get paid first, critics such as academics often blame their fees for reducing the amount left for creditors and employees.

The rising cost of Chapter 11 also reflects increasingly complicated corporate structures, and the sometimes convoluted financial dealings that a struggling company might undertake to avoid failure.

For example, Sears struck a series of refinancing deals with Lampert, which will now be investigated by a special restructuring committee of the board.

The committee will get its own set of lawyers and advisers to avoid potential conflicts of interest, piling on costs.

In addition, Sears will also pay for professionals for an official unsecured creditors committee, which is typical.

At least 36 lawyers are billing Sears $1,000 or more an hour, according to court filings.

Of course, high hourly rates could be worth it. American Airlines and General Motors arguably thrived thanks to bankruptcy, although retailers in particular tend to perish in Chapter 11.

Legal experts say that comparing the cost of Chapter 11 cases is nearly impossible because of the large number of variables in each case.

“I’m not sure we really know what a large chapter 11 case should cost, so its hard to ‘control’ fees unless they are extreme,” said Stephen Lubben, a professor at Seton Hall Law School.

Toys “R” Us in its first three months piled up more $45 million in fees, according to court records. The retailer, which went out of business after filing for bankruptcy in 2017, has paid 72 firms $375 million through December.

Judges have ordered fee examiners to hunt for unnecessary charges in the enormous fee statements – Weil’s for the first two weeks of Sears ran 330 pages, breaking down each lawyers’ time into six-minute intervals.

Mannequins are seen inside a Sears department store which was being closed as part of multiple store closures by Sears Holdings Corp in the United States in Nanuet, New York, U.S., December 21, 2018. Picture taken December 21, 2018. REUTERS/Mike Segar

Lynn LoPucki, a professor at the UCLA School of Law, called fee examiners mere window dressing on a broken system.

He said judges should require evidence from firms that they charge the same rates for clients in or out of bankruptcy.

“Most lawyers would tell you bankruptcy is a highly profitable practice,” he said.

Reporting by Tom Hals in Wilmington, Delaware and additional reporting by Richa Naidu in Chicago; editing by Noeleen Walder and Grant McCool


Source link

قالب وردپرس


Canadian Tire and NuPort Robotics to commercialize Canada’s first automated heavy duty trucks





Canadian Tire Corporation and Toronto based start-up NuPort Robotics, Canada’s first autonomous trucking company, are partnering with the Ontario government to invest $3 million to undertake an automated heavy duty trucking project to test a “first-of-its-kind-in-the-world” technology. 

The breakthrough technology provides a transportation solution for the middle mile, the short-haul shuttle runs that semi-tractor trailers make between distribution centres, warehouses and terminals each day.

It is designed to enable next-generation automated trucks that are more fuel efficient, safer to operate, and provide an enhanced driver experience.

Backed by $1 million in support from the Ontario government through Ontario’s Autonomous Vehicle Innovation Network and matched by $1 million investments from Canadian Tire and NuPort Robotics, respectively, the two-year project is applying proprietary, artificial intelligence technology from NuPort Robotics to retrofit two conventional semi-tractor trailers – which will always be attended by a driver – with high-tech sensors and controls, a touchscreen navigation system, and other advanced features such as obstacle and collision avoidance.

Caroline Mulroney, Minister of Transportation, says: “Ontario is proud to be a global leader in automated and connected vehicle technology and this innovative project is an exciting milestone toward automated vehicle tech in the trucking industry.

“Ontarians rely on goods being delivered by trucks across the province every day and projects like this are demonstrating the ways that automated truck technology could help businesses meet delivery demands more efficiently while supporting a strong supply chain in Ontario.”

Vic Fedeli, Ontario Minister of Economic Development, Job Creation and Trade, says: “This project applies unique and made-in-Ontario Artificial Intelligence technology that offers increased safety and efficiency, with a reduced carbon footprint, to the goods supply chains on which we all rely.

“This is the latest example of how Ontario’s Autonomous Vehicle Innovation Network acts as a catalyst, fostering partnerships between ambitious technology start-ups and industry to develop and commercialize next generation transportation technologies that strengthen our economy and benefit society.”

Raghavender Sahdev, CEO of NuPort Robotics, says: “The trucks are currently transporting goods between a Canadian Tire distribution centre in the Greater Toronto Area and nearby rail terminals within a 12.5 mile radius, and early results are promising.

“The aim of the project is to develop a system that incorporates an autopilot feature for conventional trucks with a driver, leading to the most efficient way to drive and increase safety.

“The sensors work as a ‘safety cocoon’ to cover blind spots and prevent accidents and the end result is peak fuel efficiency, meaning lower carbon emissions, and peak driving performance for an overall more optimal transportation experience.”

NuPort Robotic’s approach to autonomous trucking is unique in the industry because it focuses only on solving the middle mile challenge, using a known set of predetermined trucking routes that are repetitive and high frequency as opposed to general highway driving.

Ultimately, when implemented on fixed routes in the future, Canadian Tire will benefit from faster commercial deployments and improvements in supply chain sustainability.

Gary Fast, vice-president of transportation, Canadian Tire, says: “Canadian Tire embraces innovation and is always testing new technologies to improve our operational efficiency and safety.

“As proud Canadian companies, the safety of all stakeholders, including drivers, employees, customers, and public will be the top priority as we work together towards deployment of this technology.”

Cari Covent, vice president of intelligent automation, Canadian Tire, says: “Over the last three years, Canadian Tire has made a significant effort to solve complex business problems by using the Canadian start-up Artificial Intelligence ecosystem, and NuPort Robotics exemplifies what we look for in a start-up with a focus on innovation, automation and artificial intelligence.”

Sahdev says: “As NuPort Robotics continues to develop new technologies to overcome middle mile supply chain problems and advance autonomous trucking, I am extremely grateful for the support of the Ontario Government through AVIN and the Ontario Centre of Innovation.

“With their continued support, we are striving to position Canada as the leader in autonomous transportation.”

Continue Reading


Constellation Software is money in the bank, this fund manager says





If you’re looking for a long-term hold in Canadian tech then Constellation Software (Constellation Software Stock Quote, Chart, News, Analysts, Financials TSX:CSU) should definitely be on your radar. So says Jason Del Vicario of Hillside Wealth Management who likes not only Constellation but its recent spin-off Topicus (Topicus Stock Quote, Chart, News, Analysts, Financials TSXV:TOI) which Del Vicario says could do even better than CSU over the next ten years.

Software consolidator Constellation has been running on the same game plan for years, buying small vertical market software companies providing so-called mission critical software solutions globally. Over the years CSU has completed over 500 such acquisitions, buying the top names in their respective niche verticals and then using its clout and breadth to grow the business and expand into new markets. The resulting cash flow is then plowed back into more acquisitions and the cycle repeats.

The strategy has worked wonders for Constellation, which has grown its revenue from $631 million in 2010 to almost $4 billion for 2020 while taking earnings from $4.12 per share in 2010 to $20.59 per share this past year.

Shareholders were given a special treat last month when Constellation spun out recently acquired Topicus, giving CSU owners about 1.9 Topicus shares for every Constellation share as a dividend-in-kind. Constellation bought Netherlands-based software company Total Specific Solutions BV (or TSS) in 2013 and that subsidiary recently acquired Topicus BV, a Dutch information service company focusing on sectors such as healthcare, education and finance.

Topicus was singled out by Constellation founder Mark Leonard for its ability to grow without using outside shareholder funding. Leonard said the spin-out was part of the intention since a purchase agreement was struck last year.

Continue Reading


Nuvei wins price target raise from National Bank





Strong quarterly results and an even brighter outlook for 2021 are reasons to celebrate for Canadian payments company Nuvei (Nuvei Stock Quote, Chart, News, Analysts, Financials TSX:NVEI), according to National Bank Financial analyst Richard Tse. In an update to clients on Wednesday, Tse left his rating unchanged at “Outperform” while raising his price target from C$85.00 to C$100.00.

Montreal-headquartered Nuvei is a provider of payment technology solutions to merchants and partners around the world, with a platform geared for high-growth mobile commerce and e-commerce markets. Nuvei’s solutions include a fully integrated payments engine with global processing capabilities, a turnkey checkout solution and a suite of data-driven business intelligence and risk management tools and services.

The company released its fourth quarter and full year 2020 financials on Wednesday, showing Q4 revenue of $115.9 million, up 46 per cent year-over-year, and adjusted EBITDA of $51.3 million, up 61 per cent year-over-year. Total dollar value of transactions processed by merchants (‘total volume’) with Nuvei rose by 53 per cent to $13.9 billion. (All figures in US dollars except where noted otherwise.)

The 2020 year featured revenue up 53 per cent to $375.0 million and adjusted EBITDA up 87 per cent to $163.0 million, with total volume rising a full 76 per cent year-over-year to $43.2 billion.

“Our performance continues to be driven by strong momentum in the high-growth verticals we serve, as well as by our customizable, scalable and feature-rich technology platform which provides one of the industry’s most complete payment technology solutions going well beyond merchant acquiring,” said Philip Fayer, chairman and CEO, in a press release.

The company said the fourth quarter represented the strongest growth yet experienced by Nuvei, driven by wallet share expansion from current merchants along with accelerated uptake of new merchants. New e-commerce business almost tripled compared to a year earlier, Nuvei said, while the company expanded its connectivity coverage over the quarter, introduced new product innovations on its platform and continued to execute on M&A.

Continue Reading