DavidsTea Inc. has taken a step toward exiting insolvency after the Quebec Superior Court approved its plan to pay creditors $18 million.
The company said the U.S. Bankruptcy Court for the District of Delaware is expected to recognize that decision on Thursday.
Approvals would mean the Montreal-based company would exit court protection from creditors in both countries later this summer.
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The plan of arrangement was approved by creditors of DavidsTea and its U.S. subsidiary on June 11 and calls for the distribution of the funds in mid-July as a full and final settlement of all claims against the company.
DavidsTea faced $118.2 million of claims from more than 1,500 creditors, with 60 per cent originating in Canada. The claims include $3.9 million from Canadian employees, according a report from court-appointed monitor PricewaterhouseCoopers.
CEO Sarah Segal says the insolvent retailer would emerge from creditor protection a “radically different organization” with a digital-first strategy after exiting its entire retail network except 18 Canadian stores while also supplying more than 2,500 grocery stores and pharmacies.