Le Château feels the COVID heat
Retailer seeks court protection from creditors, set to close doors,
MONTREAL— After 60 years in operation, Le Château Inc. is seeking court protection from creditors to allow it to liquidate its assets and close its stores.
The Montreal-based company said Friday it has spent much of the COVID-19 pandemic trying to refinance or sell the business to a third party that would keep it in operation, but was unsuccessful.
“Its already evident impact on consumer demand for Le Château’s holiday party and occasion wear, which represents the core of our offering, has diminished Le Château’s ability to pursue its activities,” the company said.
“Regrettably, these circumstances leave the company with no option other than to commence the liquidation process.”
The company’s application for protection from creditors under the Companies’ Creditors Arrangement Act (CCAA) was to be heard by a Quebec court on Friday.
Le Château said it intends to remain fully operational as it liquidates its 123 stores, but the eventual closings will mean the end of about1,400 jobs — 500 at its head office and 900 at stores.
“We regret the impact this will have on our people and can assure you that we explored all options available to us prior to taking this difficult decision,” the company said.
Le Château expects Gordon Brothers Canada ULC and Merchant Retail Solutions ULC to be appointed as consultants to implement the liquidation and PricewaterhouseCooper Inc. to become its monitor in CCAA proceedings.
If Le Château’s CCAA application is granted, the company will obtain interim financing from Wells Fargo Capital Finance Corp. Canada to help it fund post-filing working capital requirements.
The company’s application comes after several other Canadian retailers have shuttered or downsized operations in the wake of the pandemic.
Reitmans Canada Ltd., Aldo Group Inc., DavidsTea Inc., Moores the Suit People Corp. and Laura’s Shoppe Inc. are among the dozens of retailers that have all filed for CCAA.