Small, medium businesses that supplied Target Canada hit by bankruptcy filing

Markets Associated Press

The end of Target's Canadian operations is having a financial impact on businesses in Minnesota that supplied the retailer.

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Target's Canadian division filed for bankruptcy protection last month and owes nearly $5 million to Minnesota suppliers and service providers, including Retail Merchandising Services. The Maple Grove company, which has stocked and maintained jewelry and sunglass displays at Target stores for decades, followed the retailer north of the border in 2011.

"We hired and trained 200 employees across Canada," said Phil Lamers, president of Retail Merchandising Services. "The hiring, the background checks, to do all that it was hundreds of thousands of dollars."

Retail Merchandising Services will continue to work with the retail giant in the U.S. Target owes the company $211,000, according to court documents, but Lamers said the amount is $340,000.

If Target does not pay, it won't sink the firm, but it will hurt.

"We won't have a profit-sharing contribution for 2014. And I've had to borrow more money," Lamers said. "We have a line of credit and we've got to use that to a greater degree than I would like. It's unfortunate. It's also part of life, part of business."

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Lamers said he hopes to recover at least part of what he's owed in the bankruptcy process.

Target Canada says it's committed to a fair and orderly process as it winds down operations, Minnesota Public Radio reported (http://bit.ly/1JlNRPa ).

Toronto lawyer Lou Brzezinski, who represents some of the creditors, said how much investors recoup in the end will depend on the sale of Target Canada's store leases.

"If they sell all of them, the landlords' claims will be next to nothing," Brzezinski said. "If they sell half of them, there'll be substantial landlord claims, which will dilute the amount available to creditors."