Coverage of the latest Canadian insolvency filings, court cases, news and more
Moores
Moores, a Canadian company specializing in business clothing and formalwear for men, was declared a foreign representative under the CCAA on August 5 in respect of the US Chapter 11 proceedings commenced by Tailored Brands, Inc., which operates over 1,200 American stores under the retail brands Men’s Warehouse, Jos. A. Banks, and K&G Fashion Superstore. Moores, which operates 125 retail stores in Canada, incurred losses of $22.8 million over the last five months, and currently has insufficient assets to satisfy its liabilities. Both proceedings are needed in order for the companies to continue reshaping product offerings and mix their omni-channel offerings, while dealing with the impact of COVID-19. The Chapter 11 debtors have continued the process of exiting unprofitable stores and analyzing optimal markets in which to maintain a physical presence moving forward. Grant Thornton was appointed information officer. Counsel is Stikeman Elliott for the company and McCarthy Tétrault for the information officer.
Chico’s FAS Canada, Co. (“Chico’s Canada”)
Chico’s FAS Canada, Co. (“Chico’s Canada”), which operates stores in Southern Ontario under the Chico’s and White House Black Market names, filed for bankruptcy on July 31. The bankruptcy process will result in the closure of four Chico’s and six White House Black Market boutiques in Ontario, which have remained closed since March 17 due to the COVID-19 pandemic. The closure of the Canadian boutiques is part of the company’s ongoing cost-savings measures taken to mitigate the impact of the COVID-19 pandemic and address the operational and financial challenges associated with operating in Canada. Chico’s Canada will transition to a digital-only business in Canada. KSV is the bankruptcy trustee. Counsel is Paliare Roland for the bankruptcy trustee and Osler for Chico’s Canada and its parent, Chico’s FAS, Inc..
Laura’s Shoppe Inc.
Laura’s Shoppe Inc., a Montreal, Quebec-based clothing retailer with 140 stores across Canada operating under the trade names Laura and Melanie Lyne, obtained protection under the CCAA on July 31, owing approximately $18.1 million to BMO and $13.4 million to its landlords. Founded in 1930, the company attributes its current financial difficulties to the detrimental impact the COVID-19 pandemic has had on the retail business. In July 2015, the company had filed an NOI as a result of issues it was facing with its then-lender, Salus Capital Partners. The NOI proceedings were later continued under the CCAA. The company emerged from its restructuring proceedings as a stronger business and was able to successfully operate in the rapidly-changing retail landscape until very recently, when its operations were blindsided by the unprecedented and unforeseeable pandemic. Although the company has been able to operate its online business in recent months, the online sales have been insufficient to offset the lost revenue resulting from store closures. KMPG was appointed monitor. Counsel is Fishman Flanz Meland Paquin for the company, Stikeman Elliott for the monitor, and Dentons for BMO.
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Hengyun International Investment Commerce Inc. c. 9368-7614 Québec inc., 2020 QCCS 2251
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Michael Rotsztain on the evolution of restructuring and insolvency work in Canada
“Study the past if you would define the future.” Confucius’ quote is a favourite of Michael Rotsztain, who has been practising insolvency and restructuring law for over 40 years. Beginning his career at the legendary insolvency firm of Harries Houser, where he had the good fortune of being mentored by a bankruptcy law dream team, Michael spent the major part of his career at a leading Bay Street firm and since 2014 has been the chair of GSNH’s five-lawyer Restructuring and Insolvency Group. Michael recounts how insolvencies and restructurings have evolved over his career and shares what he thinks are the next steps in the evolution.
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Sylvain Rigaud, Arad Mojtahedi and Saam Pousht-Mashhad of Norton Rose Fulbright analyze the recently released written reasons in the Bluberi case, noting that the unanimous decision of the Supreme Court, penned by Chief Justice Wagner and Justice Moldaver, reverses the decision of the Québec Court of Appeal, reinstates the supervising judge’s order, and enshrines the recognition of an insolvency court’s wide discretion to, inter alia, approve a litigating funding agreement as interim financing, and to prevent a creditor from voting on a plan where it is found that said creditor is acting for an improper purpose.