Comark Holdings Inc., Bootlegger Clothing Inc., cleo fashions Inc., and Ricki’s Fashions Inc., CCAA

Comark Holdings Inc., Bootlegger Clothing Inc., cleo fashions Inc., and Ricki’s Fashions Inc. (collectively, the “Comark Group”), which operate a fashion clothing retail and e-commerce business, obtained CCAA protection on January 7.

Ricki’s, cleo and Bootlegger are direct subsidiaries of Comark and have operated as retail clothing stores in Canada since 1939, 1994 and 1971, respectively.

In June 2020, the Comark Group obtained CCAA protection due to, among other things, the effects of the COVID-19 pandemic. The 2020 CCAA proceedings allowed the companies to close approximately 30 of their underperforming stores, renegotiate many of their retail store leases and consolidate and outsource corporate functions.

However, over the past several years, the Comark Group has experienced a series of further challenges, including the lasting effects of the COVID-19 pandemic, which have negatively impacted profitability and severely strained liquidity.

A cyber incident in 2021 significantly disrupted business operations and created long-lasting inventory management issues. Additionally, supply chain and vendor issues caused material delays in the receipt of seasonal merchandise.

The Comark Group is now insolvent, with approximately $60 million in accounts payable and accrued liabilities, including approximately $44 million merchandise owing to vendors and approximately $5 million owing to landlords, which the companies are unable to pay.

CIBC, the companies’ senior secured creditor which is owed over $32 million, has demanded payment of its loan.

The purpose of the CCAA proceedings is to wind down the cleo and Ricki’s brands, downsize Bootlegger and conduct a SISP for the remaining business and assets, including IP and leases.

A&M was appointed monitor.

Counsel is Osler for the companies, Goodmans for the monitor and Blakes for CIBC.