Fashion Giant Knocked Down by COVID-19
THUNDER BAY – In what perhaps is just a sign of the times, Le Chateau in Intercity Shopping Centre will be closing. The closure is due to the company, with 123 stores across Canada filing for bankruptcy protection. Headquartered in Montréal since its founding in 1959, LE CHÂTEAU has been an integral part of Québec’s economic, social, and cultural history.
The company says that COVID-19, and what appears to be a second wave of the virus has contributed to the decision. However, management says the company was facing difficulties before the pandemic.
Le Château is seeking creditor protection pursuant to the CCAA to ensure a responsible, controlled and orderly liquidation of its assets Montréal,
The application filed on Friday, October 23, 2020 (the”CCAA Application”) pursuant to the Companies’ Creditors Arrangement Act (“CCAA”) seeking protection of the court in order to proceed with the orderly liquidation of its assets (the “Liquidation”) and wind-down of its operations.
The CCAA Application was heard by the Superior Court of Quebec (Commercial Division) (the “Court”) today. It is expected that Gordon Brothers Canada ULC and Merchant Retail Solutions ULC will be appointed as the Company’s consultants to implement the Liquidation and that PricewaterhouseCooper Inc. will be appointed as a monitor to the Company in these CCAA proceedings (the “CCAA Proceedings”) to oversee the Company’s operations during the Liquidation.
It is expected that the current six directors of the Company will remain on the Company’s Board of Directors to assist with the Liquidation. If the CCAA Application is granted, the Company will obtain interim (DIP) financing from Wells Fargo Capital Finance Corporation Canada which will allow the Company to fund its post-filing working capital requirements during the Liquidation and the CCAA Proceedings.
In a media statement, the company says, “Management and the Board of Directors of the Company have come to the very difficult decision that the Company can no longer continue its operations as a going concern after having used its best efforts over the preceding months, with the assistance of professional advisors, to refinance or sell the Company to a third party that would continue operating the business.
“The retail industry faced numerous challenges due to the ongoing COVID-19 pandemic and the second wave currently hitting our communities across Canada. Its already evident impact on consumer demand for Le Château’s holiday party and occasion wear, which represents the core of our offering, has diminished Le Château’s ability to pursue its activities.
“Regrettably, these circumstances leave the Company with no option other than to commence the Liquidation process. Management and the Board of Directors would like to thank and recognize its 1,400 employees, including its 500 Head Office employees, whose dedication, talent and innovation have made Le Château a proudly Quebec grown fashion brand for the past 60 years.
“We also sincerely thank our 900 retail store employees for their passion, loyalty and service. We regret the impact this will have on our people and can assure you that we explored all options available to us prior to taking this difficult decision. We also thank the fashion schools and the business partners that have been part of our legacy and wish them continued success in keeping Montréal the fashion centre of Canada.
“Most importantly, we thank the millions of Canadians whom we have had the privilege of serving over the past 6 decades. Le Château, headquartered in Montréal, currently has 123 stores across Canada, in addition to its e-commerce website. Throughout this Liquidation process, the Company will remain fully operational, and physical stores are expected to remain open in conformity with provincial and regional guidelines. In light of the foregoing, the Company will also be seeking an order from the Court allowing it to suspend its obligation to hold meetings of the shareholders until further order of the Court and cancellation of the annual and special meeting of the shareholders of the Company that was initially scheduled to be held this day.