Canadian Fashion Retailer Reitmans Files for Bankruptcy Protection
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Reitmans Canada Ltd. has filed for bankruptcy protection under Canada’s Companies’ Creditors Arrangement Act, the company announced on Tuesday.
The women’s apparel retailer employs about 6,800 people and operates 576 stores under the Reitmans, Penningtons, RW & CO., Addition Elle and Thyme Maternity banners. The company says it was forced to file for bankruptcy due to the coronavirus pandemic, which caused decreased sales and forced the temporary closure of all brick-and-mortar units.
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Insiders believe CCAA to be similar to the Chapter 11 restructuring process in the United States. Through the CCAA process, Reitmans will remain open. The company is not planning to liquidate.
“Filing for protection under the CCAA is truly the hardest decision we have had to make as an organization in our almost one hundred years of history, but this pandemic has left us no choice — we believe that this is the only course of action to ensure we remain successful in the future,” said president and CEO Stephen Reitman in a release. “We will dedicate ourselves to the restructuring of our business, and then we’ll carry on with what we do best: offering affordable fashion and great service to our customers and communities for many years to come.”
During the CCAA process, Reitmans’ website will continue to take orders and the company will begin to reopen its brick-and-mortar units in accordance with government guidelines. The corporation, which was founded in 1926, is planning to focus on a digital-first strategy going forward and will “optimize its retail footprint in Canada.”
The coronavirus crisis has exposed financial weaknesses at several retailers and has been cited as the culprit behind several recent bankruptcies. A growing number of U.S.-based companies — including J.Crew, Neiman Marcus and most recently JCPenney — have filed for Chapter 11 protection over the past few weeks. Meanwhile, Reitmans is the second Canadian fashion label to file for protection under CCAA during the pandemic, following shoe maker Aldo’s application earlier this month. Meanwhile, many companies facing COVID-19 induced setbacks have taken numerous steps to improve their cash flow, such as cutting operating costs, furloughing workers and tapping revolving credit lines.
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