The Quebec government lost $37.2 million in restructuring that helped bankrupt shoe giant Aldo.
• Also Read: Aldo’s renovation is officially complete
In 2014, Prime Minister Pauline Marois announced a $40 million interest-free loan to Aldo and two grants totaling $12 million. Assistance in purchasing software and computers to help the company better sell its products online.
Implementation of the IT modernization project was difficult and Aldo’s declining sales plunged the company into a financial crisis. Aggravated by the pandemic, Aldo was forced to bail out from its creditors in May 2020.
With more than $600 million in debt, the company was forced to close 266 of its 715 stores and lay off 600 employees, half of them at its Montreal headquarters.
pieces to creditors
As part of the arrangement plan presented in April, Aldo agreed to repay its bankers $278 million over seven years. Other creditors received only 6% of what the company owed them (this percentage was higher for those with claims of $83,000 or less).
Quebec’s finance ministry thinks it can recover all of its $40 million loan, which is guaranteed by software owned by Aldo.
However, based on a report by accounting firm KPMG, the company argued that these assets were only worth $3.3 million. The government responded by ordering a report from Deloitte, which instead valued them at $86 million.
Superior Court Judge Michele Pinsonault and Court of Appeals Judge Marie-Josie Hogue both sided with Aldo’s arguments.
To justify his decision, Judge Pinsonault argued that the company could not repay the government without risking recovery, which would result in the loss of 1,150 jobs in Quebec. However, the government appealed to the court not to rush the repayment.
Quebec will lose $34.5 million of its $40 million in debt, as well as $2.7 million in unsecured debt. For its part, federal Crown corporation Export Development Canada (EDC) forfeited $13.8 million owed to it by Aldo.
He will pay $28 million
The retailer’s founder, Aldo Bensadoun, paid just over $28 million to bail it out and keep it under control. The octogenarian entrepreneur lost a $100 million loan to the retailer.
In 2017, Mr. Note that Bensadoun donated $25 million to McGill University to create the retail management school that bears his name.
Additionally, according to public data from the Canada Revenue Agency, at the end of 2020, his family foundation had assets worth more than $26 million.
Aldo in a nutshell
- Foundation: 1972
- Employees (2022): 5700
- Earnings (2019): $1.3 billion
- Operating loss (2019): $108M