Reitmans the latest retailer to file for bankruptcy protection

Reitmans (Canada) Ltd. has filed for bankruptcy protection after the pandemic forced it to close all its stores and aggravated the apparel retailer’s already-weakening business.

The virus outbreak has “pushed the retail industry into a new and unknown era,” the Montreal-based clothier said in a statement Tuesday. The company, with roots going back nearly a century, operates about 576 stores and employs 6,800 people worldwide under brands that include Addition Elle, RW & Co. and Thyme Maternity. It requested court protection through the federal Companies’ Creditors Arrangement Act.

Application under the CCAA was heard by the Quebec Superior Court on Tuesday. The company expects to remain fully operational through e-commerce. Physical stores will reopen when provincial and regional government guidelines allow it, the company said. Ontario is allowing retailers with street access to open their doors Tuesday, but indoor shopping malls remain closed.

Reitmans is the latest retailer to file for bankruptcy protection since measures to fight the pandemic put countries into lockdown mode. Footwear retailer Aldo Group Inc. also began a court restructuring process earlier this month, while luxury retailer Neiman Marcus Group Inc. filed for Chapter 11 protection in Texas and J.C. Penney Co. Inc. filed last week.

The retailer is trying to secure interim financing, it said in the statement, without providing details. It’s also in discussions with lenders for a permanent financing upon exit from the restructuring process.

The retailer temporarily laid off 90 per cent of its store employees and 30 per cent of the workers in its headquarters as a result of the pandemic. It has also reduced wages of its remaining staff.

Among its most significant creditors as of Feb. 1, Reitmans listed “various trade and other payables” owed around $109 million. Ernst & Young Inc. was appointed as the monitor in the Canadian proceedings.

Reitmans was already in a difficult state before the virus. The company’s net loss for the quarter ending Feb. 1 was $51.7 million, compared with a net loss of $8.9 million in the same quarter a year earlier. Sales rose one per cent and gross profit declined..