Claire's Canada: 62 cents on the plan, 12 in a bankruptcy

The company that sold jewellery and fashion accessories and pierced the ears of Canadian teenagers has no employees, no directors and no officers, and has not carried on business for a year. It is now called 6045073 Canada Inc.; it was Claire's Stores Canada Corp., and as of September 1, 2025 it ran approximately 103 stores across ten provinces, per the Fifth Report of the Monitor, Sept. 4, 2026, §2.0 paras. 1–2. What is left of it is roughly $4.8 million in a bank account and a fight, now settled, about how much of that money goes back to the United States.

The claim from the parent

On February 13, 2026 the Claire's Liquidating Trust filed four proofs of claim on behalf of Chapter 11 debtors, totalling approximately US$52.80 million — about $72.59 million converted at the filing-date rate. The monitor notes the quantum is consistent with the intercompany payable in the applicant's own unaudited financial statements, per the Fifth Report of the Monitor, Sept. 4, 2026, §3.1 para. 1 and n. 3.

It came in two parts. About $32.15 million was claimed for inventory supplied to the Canadian company by a Chapter 11 debtor and recorded as intercompany transfers. About $49.54 million was claimed on a promissory note made by the Canadian company in favour of a Chapter 11 debtor, dated February 1, 2020, per the Fifth Report of the Monitor, Sept. 4, 2026, §3.1 para. 2.

From April through August 2026 the monitor, Goodmans and the applicant's counsel negotiated with the liquidating trustee. The settlement and support agreement dated September 3, 2026 leaves the trust with a single allowed general unsecured claim of approximately $32.15 million. Every other claim of the relevant Chapter 11 debtors is disallowed in full — the note goes to nothing — mutual releases are exchanged, and the settlement is subject to court approval, per the Fifth Report of the Monitor, Sept. 4, 2026, §3.1 paras. 4–5.

There is a further term, and it is the one that moves the money. Section 22(3) of the CCAA bars the trust from voting in favour of the plan, so instead it consents to the plan, will support it and will not vote against it — and it will not participate in or receive any distribution from the first US$1 million, or $1,374,600, of aggregate distributions to unsecured creditors, per the Fifth Report of the Monitor, Sept. 4, 2026, §3.1 para. 5(d). The monitor calls the settlement a reduction of roughly $40 million against the amount asserted, one that increases recoveries for other creditors and avoids the expense, risk and delay of litigating the disputed parts, per the Fifth Report of the Monitor, Sept. 4, 2026, §3.1 para. 6.

What the arithmetic does

The plan puts every affected creditor in a single unsecured class and distributes in two tranches: the first $1,374,600 of the unsecured cash pool pro rata among affected creditors other than the trust, and the balance pro rata among everyone including the trust on its allowed claim, per the Fifth Report of the Monitor, Sept. 4, 2026, §4.1 paras. 2–3.

The monitor's own comparison of the plan against a straight pro rata bankruptcy distribution is a table of eight lines, and it is the most persuasive document in the motion record. Cash on hand is $4,826,000 either way. Professional fees of $750,000 come off either way. A bankruptcy would also lose $68,000 to the levy imposed under the BIA, leaving $4,008,000 distributable against the plan's $4,076,000.

Under the plan, the intercompany creditor takes nothing in the first tranche and $2,622,000 in the second; other creditors take $1,375,000 and then $79,000. In a bankruptcy the intercompany creditor takes $3,736,000 and the other creditors $272,000. Stated as recoveries: 8% for the intercompany creditor and 62% for everybody else under the plan, against 12% and 12% in a bankruptcy, per the Fifth Report of the Monitor, Sept. 4, 2026, §6.0 para. 4. The parent's trust is giving up about $1.1 million so that the trade creditors recover five times what the statute would have given them.