Steve’s Music Store seeks court approval for inventory liquidation under NOI

Steve’s Music Store Inc., one of Canada’s longest-operating family-owned music retailers, filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act on February 4, and subsequently sought approval to implement a liquidation and related restructuring measures.

Founded in 1965, Steve’s Music Store Inc. operates a long-standing chain of music retail stores selling instruments and related accessories. The business has been Montréal-based and family-owned since inception. As of the filing date, operations consisted of 1 head office and warehouse, an online storefront with in-house order fulfillment, and 5 retail locations located in downtown Montréal, Greenfield Park, Dollard-des-Ormeaux, Toronto, and Ottawa. The company employs over 80 staff across retail, warehouse, office, and administrative roles.

The debtor attributes its insolvency to sustained structural pressures affecting brick-and-mortar music retail, including declining in-store sales volumes, increased competition from online sellers, rising product and operating costs, and reduced foot traffic across physical locations. These factors materially impaired liquidity and rendered the business unable to meet ongoing obligations as they became due. By the time of filing, the company had reached a point where it could no longer service ordinary course liabilities. The filing followed the issuance of a notice of intention to enforce security under section 244 of the Bankruptcy and Insolvency Act by TD Bank, the senior secured lender, after which TD consented to the continued stay pending court approval of the restructuring framework.

Under the NOI, the debtor proposes to liquidate inventory across all store locations with the objective of maximizing realizations for stakeholders. Continental Auctioneers Inc. has been retained to conduct the liquidation, subject to court approval of a services agreement and a related charge securing its fees. To stabilize operations during the liquidation period, the debtor is seeking approval of interim financing of $250,000 to be provided by a related party. The debtor also seeks approval of a key employee retention plan covering 15 employees critical to inventory management, liquidation execution, and continuity of operations.

Ernst & Young Inc. is the proposal trustee. Continental Auctioneers Inc. is the proposed liquidation service provider. Counsel is Kugler Kandestin for Steve’s Music Store, and McCarthy Tétrault for TD Bank.