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The owner of clothing stores Dynamite and Garage has received creditor protection, as what it called a “corporate tsunami” resulting from the COVID-19 pandemic continues to impact Canada’s retail sector.

Montreal-based clothing retailer Groupe Dynamite Inc. announced on Tuesday that it was granted protection under the Companies' Creditors Arrangement Act (CCAA), making it the latest amid a number of apparel stores to seek restructuring. Groupe Dynamite is also seeking protection under Chapter 15 of the Bankruptcy Code in the United States, where it operates 85 stores. The company has more than 300 stores in total in North America.

“Our digital channels have experienced incredible growth over the past six months, but unfortunately not enough to offset empty city centres, and change of consumer needs as a result of work from home policies,” executive chairman Andrew Lutfy said in a statement. Mr. Lutfy, who is Groupe Dynamite’s sole shareholder, is prepared to provide interim financing through the restructuring, the statement said.

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The pandemic has forced a number of retailers into creditor protection as store closures dealt a significant blow to sales, shifts in people’s shopping habits accelerated, and uncertainty around the economic recovery affected their future outlook. Companies can pursue restructuring through the CCAA process, or under the Bankruptcy and Insolvency Act, which is a lower-cost option that gives companies a shorter time period to propose a plan than under CCAA.

Retailers in Canada that have sought protection under either option since the pandemic began include DavidsTea Inc., Le Château Inc., Comark Holdings Inc. – which owns Ricki’s, Celo and Bootlegger stores, Reitmans Canada Ltd., Aldo Group, Sail Outdoors Inc., Frank and Oak owner Modasuite Inc., and Lolë owner Coalision Inc.

In its statement on Tuesday, Groupe Dynamite said it expects the business impacts of the pandemic to continue until a vaccine is widely available.

Groupe Dynamite was founded in 1975, and employs 3,800 staff at its stores and another 530 at its head office and warehouse. The company said in its statement that it does not plan to cut any head office or warehouse jobs, and hopes to transfer some employees from stores that it decides to close. A “minimal” number store staff will be affected, the statement said.

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