Sonder’s Canadian units file for bankruptcy after Marriott split triggers sudden shutdown

Sonder Canada Inc. and Hospitalité Sonder Canada Inc. entered bankruptcy on November 12, marking the collapse of the hospitality group’s entire Canadian platform only days after Marriott International terminated its licensing deal and NASDAQ-listed parent company Sonder Holdings Inc. moved to wind down globally. Ernst & Young has been appointed trustee, with Norton Rose Fulbright acting as its counsel, and Blake Cassels & Graydon acting for the debtors.

The filings close a remarkable chapter for a company that began as a Montreal start up in 2012 and quickly drew attention from Canadian venture investors and the broader tech community. Sonder pitched a model that blended the consistency of hotel stays with the appeal of apartment style accommodations and leaned heavily on a young workforce that helped the brand scale across multiple continents. By 2019 the company had achieved a valuation above one billion dollars and was celebrated as an emerging Canadian success story before shifting its headquarters to the US as part of its growth strategy.

In 2024, Sonder entered into a licensing deal with Marriott which was expected to grow Sonder’s customer base and bring in new revenues. Unfortunately, things unraveled quickly from there. On November 9 of this year, Marriott stated that Sonder had defaulted under the licensing agreement and declared the arrangement no longer in effect. Sonder then halted operations on November 10 and confirmed in a US press release that it would pursue an immediate liquidation, attributing the decision to prolonged and costly integration challenges with Marriott’s technology systems as well as a steep revenue decline linked to the move into the Bonvoy reservation channel.

The Canadian entities followed two days later with assignments in bankruptcy. Sonder Canada is the holding company and Hospitalité Sonder Canada is the operating arm for 958 units across 15 properties in Montréal, Toronto, Ottawa, and Vancouver. The group also leased an office and a warehouse in Montréal. EY is beginning the process of securing books and records, assessing lease exposure, and communicating with landlords and trade creditors.

Sonder’s US affiliates filed Chapter 7 petitions on November 14 in Delaware to begin a court-supervised liquidation. The parent company disclosed that it had explored financing, strategic alternatives, and potential sale transactions but was unable to secure a going concern deal. Its board ultimately authorized an immediate shutdown across all jurisdictions where the company operates.

The collapse leaves property owners, lenders, service providers, and thousands of guests and employees facing uncertainty. Marriott has said it is working directly with guests who booked through its platforms, while those who booked through other channels have been directed to contact their original providers. In Canada, EY is expected to address claims related to prepaid stays, unpaid vendors, and lease liabilities as part of the bankruptcy administration.

The trustee’s initial tasks will include collecting financial information, verifying the status of the Canadian lease portfolio, and preparing for a realization process that may involve furniture, fixtures, equipment, and any remaining receivables.