INTRODUCTION
This web site has been developed by Koskie Minsky for
the exclusive use of employees and former employees of Irwin Toy Limited in
order to provide general information on issues affecting you during the
insolvency proceedings of Irwin Toy. On February 28, 2003, Mr. Justice Farley
of the Ontario Superior Court of Justice appointed Kerry Murray, a former
employee of Irwin Toy, as Employees' Representative and our firm as Employees'
Representative Counsel.
This web site is not designed to answer questions about specific or individual
situations The information provided on these pages is not legal advice or a
substitute therefor.
We are posting the reports as prepared by the Monitor, of Irwin
Toy (PricewaterhouseCoopers) and by the Interim Receiver of Irwin Toy (Ernst
& Young) for your perusal. Please click on the Reports button to the left
of this page.
HIGHLIGHTS OF THE INSOLVENCY TO DATE
The following is a brief summary of the insolvency proceedings. There has been
no restructuring of Irwin Toy. The Interim Receiver has instead liquidated.
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December 2, 2002: Irwin Toy applied for and received protection from creditors
under the Companies' Creditors Arrangement Act (CCAA). On the same day,
Irwin Toy terminated 135 employees. The accounting firm of
PricewaterhouseCoopers (PwC) was appointed as the "Monitor" of the company
while it is under CCAA protection.
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January 15, 2003: The major secured creditor of Irwin Toy, Congress Financial
Corporation (Canada) applied to court for the payment of $9.8 million to
satisfy Irwin Toy's indebtedness to Congress. The order was granted by the
court and Congress was paid. On the same day, Congress also applied to install
an interim receiver, the accounting firm of Ernst & Young (E&Y) to take
control of Irwin Toy's assets. Also on the same day, the two Directors of Irwin
Toy, John-René Halde and Richard Ivey, indicated that they would be resigning
their positions.
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On February 19, 2003, E&Y closed Irwin Toy's Millcreek warehouse and
transferred remaining inventory and equipment to the Irwin building located at
43 Hanna Avenue. E&Y arranged for an auction of the assets remaining at 43
Hanna Avenue, including equipment transferred from the Millcreek warehouse, but
excluding all inventory, leased equipment and items included in the sale
agreements negotiated by Irwin Toy or E&Y. Auctions were completed by May
5, 2003.
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E&Y spent considerable time sorting out the affairs of the Irwin Toy
subsidiary, Irwin International (Barbados) SRL which was incorporated on June
21, 2002.
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The Interim Receiver continued to liquidate Irwin Toy's assets over several
months. It concluded the sale of the Hanna Properties to Lanterra Developments
Ltd. in the amount of $10 million. The Interim Receiver had discussions with
the major creditors (being Richard Ivey, Chinese suppliers and the employees)
to set up a claims process for the payment of claims.
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On August 21, 2003, the Interim Receiver appeared before Mr. Justice Nordheimer
of the Ontario Superior Court of Justice for approval to enter into an
agreement with Ivest Corporation, Richard Ivey's company, for the sale of the
Irwin Toy tax losses for $1.5 million. We attended in court on the employees'
behalf. Mr. Justice Nordheimer authorized the Interim Receiver to enter into
the transaction. The Court also approved the extension of the Stay Period to
November 28, 2003 to permit the implementation and completion of the CCAA Plan
Process. To view the Sixth Report of the Interim Receiver (Ernst & Young
Inc.) and the Eighth Report of the Monitor (PricewaterhouseCoopers Inc.) in
support of this motion, please click "Reports" to the left of this page.
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The Interim Receiver prepared a claims process under the CCAA. The CCAA Plan
was finalized at the end of November, 2003, a claims process put in place on
December 2, 2003 and payments to all creditors, including employees, were
released early in the New Year. To view the CCAA Plan Process schedule, please
click "Court Documents" to the left of this page.
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On October 7, 2003, we filed an Omnibus Proof of Claim with the Interim
Receiver on behalf of all employees we represent. The total claim amount was
for $12,508,543.45.
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On October 14, 2003, the Interim Receiver delivered a "Notice of Revision or
Disallowance" to us which contested a number of the claims filed on behalf of
the employees.
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On October 24, 2003, we filed a "Notice of Dispute" contesting the disallowance
by the Interim Receiver. We anticipate that the majority of disputes will be
settled following negotiations with the Interim Receiver. However, a few claim
issues may be brought before a claims officer for a ruling. Should that occur,
we will correspond with you individually with details.
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As Irwin Toy is insolvent, employees will not be receiving the full claim
amount. The Interim Receiver has estimated the range of dividend distribution,
as set out below:
| Estimated Dividend Distribution to Unsecured
Creditors (calculated as at Sept. 5/03) (000's omitted) |
Irwin Toy
(CDN$)
Low
-//-
High |
Irwin Toy USA
(US$)
Low
-//-
High |
Irwin Barbados
(US$)
Low
-//-
High |
| Estimated amount available to unsecured creditors |
21,000
-//-
24,000 |
16,500
-//-
17,000 |
9,500
-//-
10,500 |
| Total estimated claims of unsecured creditors |
65,000
-//-
61,000 |
44,500
-//-
43,500 |
23,500
-//-
22,500 |
| Total estimated range of dividend distributions to
unsecured creditors |
0.32
-//-
0.39 |
0.37
-//-
0.39 |
0.40
-//-
0.46 |
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Employees of Irwin Toy Canada are expected to be paid between 32 and 39 cents
on the dollar on submitted claim amounts.
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Part of your claim consists of an amount owing to you based on "common law
notice factors" which are over and above amounts owing to you based on the
notice periods required by the Employment Standards Act, 2000 (Ontario)
("ESA"). The notice periods in the ESA are a minimum standard which must be
provided to each employee by an employer on termination and cannot be reduced.
For the additional common law portion of notice, there is a further
principle of law that requires an employee to "mitigate" his or her damages
following termination of employment, meaning that an employee is required to
look for other work after being terminated. We have reached an agreement with
the Interim Receiver that mitigation will be applied to the common law notice
portion only by determining which employees obtained employment after being
terminated by Irwin Toy and on what date. If so, the common law portion of
notice (but not the ESA portion) will be reduced.
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On November 27, 2003, we mailed a reporting letter to all employees, enclosing
each employees' claim summary and a Statutory Declaration form which we require
you complete and return to us. The Statutory Declaration is designed to provide
information about whether or not you obtained employment after being terminated
from Irwin Toy and, if so, on what date and your rate of income. This document
will be provided to the Interim Receiver. The Interim Receiver has the
discretion to request that you provide supporting documents at a later date for
the information you include in the Statutory Declaration. If you have not
submitted your Statutory Declaration, it is imperative that you do so
immediately.
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On January 1, 2004, the Interim Receiver released to employees the first of two
dividend payments representing the vacation pay owing as at the date of
termination of employment, not exceeding one year's worth of vacation pay and
was paid at 100 cents on the dollar. The balance of your vacation claim is for
vacation owing on your notice period (i.e. the period post termination) which
will be part of your unsecured claim (i.e. approximately 32 - 39 cents on the
dollar), together with the other components of your claim amount.
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The balance of your claims for termination, severance and other amounts owing
to you have been submitted to Human Resources Development Canada ("HRDC") who
must pre-approve dividend payments to employees in order to prevent any
overpayment of Employment Insurance benefits. The law states that terminated
employees cannot receive amounts relating to termination of employment and
collect Employment Insurance benefits for the same period of time. If you
received Employment Insurance benefits after being terminated from Irwin Toy,
your second dividend payment will be reduced accordingly and the Interim
Receiver, Ernst & Young, will make a payment directly to HRDC on your
behalf. We will update this message once the second dividend payment is ready
to be released which will be several weeks away.
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Pursuant to the court order of Mr. Justice Farley of February 28, 2003, a
portion of employees' legal fees will be applied to each dividend payment pro
rata and paid to our firm.
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It is essential we have your current address. If you move, the Interim Receiver
will make no effort to locate you. To protect your privacy, we cannot take
changes of address by telephone. If you have a change of address, please write,
e-mail or fax our office. Our address is 900 - 20 Queen Street W., Toronto, ON
M5H 3R3. If you have any questions, please call us at 1 888-502-7460 or send us
an e-mail at irwintoy@kmlaw.ca.
Our fax number is 416 204-2897.
CLASS ACTION LAWSUIT
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We commenced a separate class action lawsuit against the Directors of Irwin Toy
(Jean René Halde and Richard Ivey) for the same amounts we claimed on your
behalf in the insolvency proceedings. The lawsuit seeks that those amounts be
paid personally by the two Directors (instead of by the company). Legal
counsel to the two Directors has contacted us in order to discuss settlement of
that class action lawsuit and we are moving toward a settlement. Once a
settlement is finalized, we will correspond with you further. The settlement of
the class action lawsuit will involve the payment of part of the claims we
submitted for you in the insolvency proceedings but will be paid dollar for
dollar, minus an amount for legal costs. With the class action, we are working
toward you receiving a payment from the settlement of the class action lawsuit,
as well as dividend payments in the insolvency proceedings.
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