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Le Château plans to close its doors, files for CCAA protection

Click to play video: 'Coronavirus: Pandemic claims another Quebec business' Coronavirus: Pandemic claims another Quebec business
WATCH: Clothing retailer Le Chateau, founded in Montreal in 1959, has filed for CCAA protection, and plans to close its doors. The company owns 123 stores and employs more than 1,400 people. As Global's Tim Sargeant explains, this latest bankruptcy notice is just one in a long chain of businesses failing due to the pandemic – Oct 23, 2020

After 60 years in operation, Le Chateau Inc. is seeking court protection from creditors to allow it to liquidate its assets and close its stores.

The Montreal-based company said Friday that 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 Chateau’s holiday party and occasion wear, which represents the core of our offering, has diminished Le Chateau’s ability to pursue its activities,” the company said.

READ MORE: Le Château begins manufacturing 500,000 hospital gowns

“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) will be heard by a Quebec court on Friday.

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Click to play video: 'Le Château, Swimco announce plans to close store doors' Le Château, Swimco announce plans to close store doors
Le Château, Swimco announce plans to close store doors – Oct 23, 2020

Le Chateau said it intends to remain fully operational as it liquidates its 123 stores, but the eventual closures will mean the end of about 1,400 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.

Read more: Reitmans closing Thyme Maternity, Addition Elle brands amid restructuring

Le Chateau 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 Chateau’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.

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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., Mountain Equipment Co-operative, Moores the Suit People Corp. and Laura’s Shoppe Inc. are among the dozens of retailers that have all filed for CCAA.

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