Reitmans seeks court protection from creditors
MONTREAL — Reitmans (Canada) Ltd. received an initial order on Tuesday after seeking court protection from its creditors under the Companies’ Creditors Arrangement Act to allow a restructuring of the women’s clothing retailer.
The retailer’s application was heard by the Quebec Superior Court earlier Tuesday. Ernst & Young Inc. was appointed as monitor for the CCAA process and will assist the retailer in creating a restructuring plan, the company said in a statement.
The plan will have to deal with the business fallout from COVID-19, which prompted retail outlets across Canada to shut their doors temporarily in an effort to help contain the pandemic from spreading, the company said in a statement before the court proceedings.
Reitmans closed 587 stores on March 17, but its e-commerce websites have remained open. At the time, the company also announced it would temporarily lay off 90 per cent of its
Canadian retail staff, starting March 29, across its five banners: Reitmans, Penningtons, Addition Elle, RW & Co. and Thyme Maternity. Thirty per cent of its Montreal head-office staff were also laid off starting March 30. Remaining employees, meanwhile, were asked to contribute to on-going cost-saving initiatives.
“Filing for protection under the CCAA is truly the hardest decision we have had to make as an organization in our almost 100 years of history, but this pandemic has left us no choice,” chief executive Stephen Reitmans said.
Reitman assumed the CEO role in early 2020 following the death of his brother, Jeremy Reitman, who served as chief executive and chairman.
“We believe that this is the only course of action to ensure we remain successful in the future.”
The board reached the unanimous decision to file for court protection after having considered other alternatives, the company said.
In conjunction with its court filing, the company has undertaken a process to secure interim financing to allow its remaining 576 stores to continue operations as retail reopens. The company, which employs about 6,800 people and was founded in 1926, now operates 259 Reitmans, 106 Penningtons, 80 RW & Co., 77 Addition Elle and 54 Thyme Maternity outlets.
“As the restructuring process gets underway, the company will look to optimize its retail footprint in Canada to emerge from this process in a stronger state,” the company said.
Reitmans is also in talks with lenders for permanent financing upon exit from the restructuring process, and is seeking an order from the Quebec Superior Court to postpone its annual general meeting of shareholders.
“The retail landscape has been in constant flux over the past several years, resulting in the evolution of consumer behaviour and purchasing patterns,” the company noted, adding it has implemented what it called “a successful digital-first strategy” and other initiatives to drive growth in the changing environment.