UCG Canada Holdings Inc. dba Frank & Oak, NOI

UCG Canada Holdings Inc. dba Frank & Oak, a Montréal, Québec-based consumer brand that specializes in the design, production and retail distribution of responsible apparel and accessories, filed an NOI on December 18 listing approximately $71 million in liabilities, including approximately $55.5 million to UGC Holdings Inc., its sole shareholder.

The company was acquired by UCG Holdings in the context of restructuring proceedings under the BIA in October 2020.

UCG Holdings invested significant funds and worked to convert the company’s subscription-based model into a multi-channel retail model, including by developing the wholesale and licensed channels as new sources of revenue, consolidating and improving the quality of the company’s suppliers, and closing unprofitable stores while opening five new stores. Despite these efforts, the company has faced significant financial difficulties over the past years and is unable to fund current operations on a going concern basis.

The continued impact of the COVID-19 pandemic delayed the company’s ability to drive productivity in the newly-opened stores, resulting in some being closed, and caused a substantial reduction in profitability of the existing stores.

Supply-chain issues and delays have also impacted sales levels and caused issues in planned wholesale shipments (the conflict in Gaza delayed one third of the brand’s spring 2024 shipments), leaving the company with increasing amounts of inventory left to liquidate at the end of the retail cycle.

The company implemented a series of cost-cutting measures, including laying off 20% of its workforce, reducing high-pay leadership jobs at the head office and negotiating with landlords and suppliers, but its financial situation has continued to deteriorate.

The purpose of the NOI proceedings is to restructure its business operations and launch a SISP.

PwC is the proposal trustee.

Counsel is Fasken for the company, Stikeman Elliott for the proposal trustee, Parr Brown Gee and Loveless for UGC Holdings and Gowling WLG for Cadillac Fairview.