Eddie Bauer's Chapter 11 recognized in Canada

Earlier today (February 18, 2026), the Ontario Superior Court of Justice (Commercial List) recognized the Chapter 11 proceedings of Eddie Bauer LLC and its affiliates as a foreign main proceeding under Part IV of the CCAA. The recognition follows the Chapter 11 filings made on February 9, 2026 in the United States Bankruptcy Court for the District of New Jersey and confirms that the centre of main interests of each debtor, including the two Canadian entities, is the United States.

Founded in 1920 by Mr. Eddie Bauer in Seattle, Washington, the company evolved into a North American retailer specializing in casual apparel, outdoor gear, and home goods. As of the petition date, it operated 175 leased retail stores across North America, including 151 in the United States and 24 in Canada across 6 provinces. In FY2025, Canadian sales represented about 11% of consolidated net revenue, or $62.4 million, and 20.5% of retail sales.

The Canadian operating entity (Eddie Bauer of Canada Corporation) is wholly-owned through a Canadian holding company (13051269 Canada Inc.) and is deeply integrated with U.S. operations for sourcing, treasury, IT, and corporate support. As of February 5, 2026, the group’s primary secured indebtedness totaled $1,541,457,178 across three prepetition loan facilities. The Canadian debtors recently provided a limited guarantee of up to $6,384,000 in respect of obligations under the ABL facility.

The Chapter 11 filings followed sustained negative earnings since 2022, driven by inflationary pressures, tariff changes, and rising operating costs. The company also faced significant obligations under an intellectual property license agreement requiring $31 million in guaranteed minimum royalty payments, plus a $3 million annual marketing fee, resulting in approximately $220 million in projected future payments over six years.

Although the license was amended to terminate wholesale and e-commerce rights and eliminate future minimum royalties, cash flow projections remained negative. In January 2026, SPARC Group Holdings LLC, which had been funding operating shortfalls through intercompany loans, advised that it would cease funding losses, creating acute liquidity pressure.

After granting an Interim Stay Order pending entry of the U.S. first day orders, the Ontario Court granted full recognition on February 18, recognizing various orders granted in the U.S., including orders pertaining to bidding procedures and store closing sales.

The proposed restructuring is anchored by a Restructuring Support Agreement with prepetition lenders, contemplating two interlocking processes: one or more going-concern sale transactions and an orderly wind-down of unsold operations.

Justice Cavanagh emphasized that coordination with the U.S. Court would further comity and ensure equal treatment of stakeholders in both jurisdictions.

KSV Restructuring Inc. was appointed as Information Officer. Counsel is Osler, Hoskin & Harcourt LLP for Eddie Bauer; Bennett Jones LLP for the Information Officer; Blake, Cassels & Graydon LLP for the ABL Administrative Agent; Camelino Galessiere LLP for various landlords; and Cassels Brock & Blackwell LLP for Hilco, the proposed liquidators.