Le Chteau goes bust, becoming latest retail victim of COVID-19

Retailer Le Chteau is seeking court protection from its creditors while it winds down its operations and liquidates its assets.

The Montreal-based fashion chain with 123 locations across Canada and 1,400 employees said in a release Friday that it has applied for protection from its creditors under theCompanies' Creditors Arrangement Act, or CCAA.

In a release, management said it had "come to the very difficult decision that the company can no longer continue its operations as a going concern after having used its best efforts over the preceding months, with the assistance of professional advisers, to refinance or sell the company to a third party that would continue operating the business."

The chain said the ongoing COVID-19 pandemic has had an"evident impact on consumer demand for Le Chteau's holiday party and occasion wear, which represents the core of our offering [and] has diminished Le Chteau's ability to pursue its activities. Regrettably, these circumstances leave the company with no option other than to commence the liquidation process."

The retailer was scheduled to have its annual general meeting in Montreal on Thursdaybut abruptly cancelled the event two days priorwithout explanation beyond saying that the company "will provide further updates in due course."

In the three-month period up until July 25,Le Chteauracked up just $14.7 million in sales across its network of stores and online. That's down from almost $50 million in the same period last year. As of July, the company says it had about $118 million in assets, against $201 million worth of liabilities.

At the time, the chain thanked its landlords for granting it$4.6 million worth of rent relief for July and August. Despite that, it still warned there was some doubt about the chain's "ability to continue as a going concern for the next 12 months."

The chain is just the latest Canadian retail brand to file for CCAAamidCOVID-19, including clothier Reitmans, drink seller DavidsTea, outdoor gear sellersMECand Sail, fashion chain Mendocino, the company that owns Ricki's Cleo and Bootlegger,and shoe retailerAldo.

The CCAA proceedings will mean Le Chteauwill soon begin the process of selling off all itsremaining merchandiseand shutting stores. It brings an end to the chain's 60-year historyand an end to a Canadian brand that was at various points at the top of Canada's fashion world, fashion journalist Jeanne Beker said.

Founded in 1959in Montreal, the chain was a major driver of what Beker calls the "youthquake" in fashion at the time, when all of a sudden children didn't want to wear the clothes their parents got for them, and instead establish a style of their own.

"Le Chteau was at the vanguard of all that," Bekersaid in an interview Friday. "Le Chteau was the hipplace where you went to get the hip cool styles a lot of styles that had not been that readily available in Canada before at a price that was affordable, too."

While COVID-19seems to have been "the final nail in their coffin," as Beker puts it, the chain had problems before, as it struggled to keep up with not only the capricious nature of fashionbut also a growing movement toward sustainability in supply chains.

"Fashion has changed in a bigway. The way that we consume fashion has changed, the way we buy it, the way we wear itall those things have changed," Beker said. "Itwas only a matter of time."

LISTEN Jeanne Beker explains what Le Chteau has meant to Canada's fashion landscape

CBC News8:56Jeanne Beker on Le Chteau

Fashion journalist Jeanne Beker says the chain that's seeking court protection from its creditors was on the vanguard of Canadian fashion for many years before falling on tough times.

Young people who once would have been the chain's target demographic "are marching to the beat of a whole new drummer now," she said.

"They don't want the cheap and cheerful [thing to] wear for a season or two."

"Value Village ... that's the hip thing to do, not to buy a prom dress atLe Chteau."