Montreal-based fashion platform SSENSE is planning to file for creditor protection after claiming that its lenders are trying to sell the company without its consent.
The company, which sells luxury clothing and accessories online and in its store in Montreal, sent a memo to staff Thursday morning informing them of the move by the lenders, saying “we do not believe this is the right path for us.”
The memo, obtained by CTV News, explains that SSENSE will file an application under the Companies’ Creditors Arrangement Act “to protect the company, retain control of our assets and operations, and defend our future.”
The memo said the company expects the matter to be heard in court in the coming days and said Thursday marked a “turning point” for the company, citing a significant development in the tariff war initiated by the Donald Trump administration.
Aug. 28 is the last day of the de minimus exemption, which allows packages worth US$800 or less to be shipped to the United States duty-free. After Thursday, shipping costs are expected to skyrocket, sparking concern for small businesses.
Trump has called the exemption a “big scam” that has been “killing Americans and hurting U.S. businesses.” The White House similarly has accused the exemption of allowing deadly drugs to seep into the U.S.
“Over the past year, market conditions have changed dramatically, including limited liquidity in the market and increased commercial pressures. More recently, two major developments have occurred: the elimination of the de minimis exemption in the United States and the filing by our main lender of a creditor-initiated CCAA application without our consent,” SSENSE said in its memo.
“These events caused an immediate liquidity crisis that could not be resolved by any short-term solution. After exploring all options, we concluded that restructuring under the CCAA is the only way to continue our operations.”
SSENSE employs roughly 1,200 employees globally. They will still receive salaries and benefits, and they will still be able to claim work-related expenses during the court process, the company told staff.
The retailer will continue operating as normal.
The privately held company, which was founded in 2003 by brothers Rami, Firas and Bassel Atallah, generates an average of 100 million monthly page views, according to a 2023 news release. About 80 per cent of its clientele are between the ages of 18 and 40.
Tough times for Quebec retail brands
The CCAA proceedings come at a challenging time for Quebec clothing brands. In April, Montreal-based fashion retailer Frank And Oak closed nine stores across Canada as its parent company filed for creditor protection under the Bankruptcy and Insolvency Act last December, citing challenges dealing with the COVID-19 pandemic.
The retailer owes about $71 million to creditors, including textile businesses, landlords and utility companies, according to court records.
Montreal-based Groupe Dynamite, which owns Garage and Dynamite clothing stores, also announced in April that it expected to close about 10 stores in Canada this year.
According to a recent survey by Quebec’s retail council, the Conseil québécois du commerce de détail, (CQCD), 58 per cent of retailers in the province said they have noticed a drop in sales since the emergence of fast-fashion brands such as Shein and Temu, while 17 per cent of them noticed a “significant” decline in sales.
Nearly one-third (30 per cent) say they have modified their sales strategy, and 13 per cent reported having to reduce staff as a result of the foreign e-retailers.
In a brief for consultations in anticipation of the next federal budget, the CQCD accuses the fast fashion industry of flouting environmental standards, driving “opportunistic consumption,” and circumventing Canadian tax, product safety and labour laws.
