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#Written by David Tam, 1997. #
#davidkftam@netscape.net Copyright 1999#
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David Tam
Tuesday, March 11, 1997.
Business Press Review
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Strauss, Marina. "Eaton's wins right to claim goods". The Globe and Mail.
Saturday, March 5, 1997. B2. ------------------
An Ontario Court judge has ruled that under Eaton's CCAA order -- the
Companies' Creditors Arrangement Act -- creditors will not be able to reclaim
merchandise shipments to Eatons. From this decision, Eatons will be able to
continue normal inventory activities unaffected by its financial troubles.
Normally, creditors are allowed to try and reclaim merchandise that was sold 30
days before a bankruptcy declaration. However, under the CCAA, non of the
creditors will be able to reclaim merchandise. Currently, this includes over
$1-million worth of inventory located in a warehouse operation.
This decision is contrary to a Quebec court's decision, made the day
before, to allow Creations Claire Bell Inc. to retrieve merchandise from
Eatons. It was ruled that the new decision had precedence over the older
decision. Reasons for the decision include that the inventory levels of Eatons
stores must remain constant in order to conduct proper business and maintain
customer good will. This was also needed in order for future restructuring
plans to be successful.
It was mentioned in the article that Eatons chose to use the CCAA instead
of the Bankruptcy and Insolvency Act, which would have had serious effects on
the operations of the business. The lawyers at Eatons were pretty clever to
invoke this alternative act, giving more protection to Eatons. Perhaps this
was an example of long-term planning. This act may have been drafted many
years before as an exercise in covering possible future hazards. As seen in
the article, this new ruling has frustrated several suppliers who have all
tried unsuccessfully to reclaim merchandise.
(
geocities.com/siliconvalley/campus/9640/2ndYear) (
geocities.com/siliconvalley/campus/9640) (
geocities.com/siliconvalley/campus) (
geocities.com/siliconvalley)