The 'vendor reserve fund' will be carved out of a broader budget meant to cover some expenses as the retailer winds down its business in the largest-ever U.S. retail liquidation, Toys ‘R’ Us lawyer Joshua Sussberg said at a hearing at U.S. Bankruptcy Court in Richmond, Virginia.
However, the amount fails to cover total trade claims worth roughly $760m, lawyers who represent trade vendors said at the hearing.
Many vendors believed that payment for shipments after the Sept. 18 Chapter 11 filing would be covered by a $3.1bn bankruptcy loan, but that loan gives priority to lenders and other expenses such as legal fees, lawyers said on Tuesday. [more]
- This highlights the fact that when a customer goes bust, suppliers come last for payment in a list that includes government agencies/tax, secured lenders, and staff...
- For this reason, it is vital that NAMs & KAMs constantly monitor their financial exposure to all customers, given that they are in fact unsecured lenders at zero interest rate...
- Apart from watching for signals from the market that credit insurers are refusing to offer cover (i.e. too late!), a supplier should divide their annual sales to the customer by their (the supplier's) net margin before tax, and multiply by 100.
- This gives the incremental sales required by the supplier in order to replace the profit lost via a customer going bust...
