The owner of mall-based clothing chains such as Stitches, Bluenotes and Suzy Shier has agreed to purchase some assets of Le Château Inc. out of bankruptcy.
Toronto-based YM Inc. has agreed to buy Le Château’s intellectual property, as well as some of its merchandise and signage, according to documents filed with the monitor overseeing Le Château’s creditor-protection process.
The deal was approved by the Superior Court of Quebec on Tuesday.
According to the documents, the deal will “allow for the preservation of the Le Château brand,” but it was not immediately clear whether YM will continue to operate stores under the brand. Terms of the deal were not disclosed.
Le Château was already struggling before COVID-19 hit the retail industry hard, and when pandemic-related lockdowns meant that many of its stores had to temporarily close, it was forced to seek new sources of financing. That included looking for a buyer for the chain. But in October, 2020, the Montreal-based company instead announced that it would close all 123 of its stores across Canada after 61 years in business.
At that time, Le Château was granted protection under the Companies’ Creditors Arrangement Act (CCAA) in order to wind up the operations.
Le Château had reported a $69.2-million net loss in the year ending on Jan. 25, 2020, and a $23.8-million net loss the year before. While e-commerce sales were growing, sales in stores were declining.
Le Château’s liquidation process was initially planned to be completed this spring, but was delayed by lockdowns in recent months, especially in Ontario where shopping malls remain closed.
Earlier this year, Le Château began a sales process for its intellectual property assets, and received an offer from YM on May 21. The companies agreed to a deal on June 18, which would see YM purchase Le Château’s intellectual property, books and records, merchandise at some stores that had not yet been liquidated, signage and various supplies including hangers, mannequins, furnishings and packaging and shipping materials.
YM began in 1975 with the first Stitches store in Toronto, and now employs more than 5,000 people and runs more than 650 stores, according to its website. YM also owns chains Urban Planet and Sirens. It purchased Suzy Shier in 2003, and Bluenotes in 2005. It then purchased West49/Amnesia in 2013.
Representatives for both YM and Le Château did not respond to requests for comment.
Mall-based stores, especially those that sell clothing, have continued to suffer during lockdowns. In April, retail sales in Canada fell by 5.7 per cent to $54.8-billion in total, Statistics Canada reported on Wednesday. Sales at clothing and clothing accessories stores fell by 28.6 per cent, to $416-million.
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