1,400 employees affected as 123 locations across Canada will close
After 60 years in operation, Le Chateau Inc. is seeking court protection from its creditors as the Quebec retailer announces its intention to liquidate its assets and shut down operations of its stores.
The Montreal-based fashion chain said in a release Friday that it has applied for protection from its creditors under the Companies' Creditors Arrangement Act, or CCAA. The news comes after the company has unsuccessfully tried to refinance or sell the business to a third party since the start of the pandemic.
"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. "Regrettably, these circumstances leave the company with no option other than to commence the liquidation process."
In the meantime, Le Chateau says it intends to remain fully operational as it liquidates its locations, but the eventual closures will mean the end of about 1,400 jobs — 500 employees who work at the head office and 900 other employees who work at the 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. “We thank the millions of Canadians whom we have had the privilege of serving over the past six decades.”
According to CBC News, the company sales dropped down from almost $50 million since the start of the pandemic. As of July, the company says it had about $118 million in assets, against $201 million worth of liabilities.
Founded by Herschel Segal in 1959, as Le Chateau Men's Wear, the company began as a menswear store in downtown Montreal Victoria Square. Segal gave his store a French name because of the budding francophone feelings occurring in Quebec. By the early 1960s, the company almost went bankrupt and was forced to close all its locations but the original store. Two years later, the company bounced back, adding a women's clothing line; shortening the brand name to Le Château, and switching to selling imported European fashions.
The chain is just the latest Canadian retail brand to file for CCAA under COVID-19, joining a list that also includes Reitmans, DavidsTea, and Aldo.