MONTRÉAL, Canada — Footwear retailer Aldo Group Inc. began a court restructuring process Thursday after the pandemic shuttered stores and worsened the company’s already-struggling business.
The Montréal-based company operates about 3,000 stores and employs 8,000 people worldwide. It requested court protection through the Companies’ Creditors Arrangement Act in Canada, is seeking similar protection in the U.S. and is about to do the same in Switzerland, Aldo said in a statement. Ernst & Young Inc. was appointed as the monitor in the Canadian proceedings.
“The impact of the Covid-19 pandemic has put too much pressure on our business and our cash flows,” Chief Executive Officer David Bensadoun said in the statement. “After conducting an exhaustive review of strategic alternatives, we determined that filing under CCAA and related proceedings is in Aldo’s best interest to preserve the company for the long term and survive through this challenging period.”
The retailer expects to carry on business while it develops and implements a restructuring plan across the organization, Bensadoun said.
Aldo is the latest retailer to file for bankruptcy protection since measures to fight the pandemic put much of the world into lockdown. Luxury retailer Neiman Marcus Group Inc. filed for bankruptcy in Texas on Thursday, and preppy apparel chain J. Crew Group Inc. filed for Chapter 11 protection in Virginia on Monday with plans to hand control to its lenders.
Aldo’s pre-petition debt includes a C$300 million ($214 million) revolving loan arranged by Bank of Montreal that matures in October 2022.
Aldo has struggled in recent years to maintain relevance in a world of increasing acceptance of casual footwear. Bensadoun said in a 2018 interview that the company was competing with makers of athletic wear as more workplaces embrace casual attire.
The Quebec government’s investment arm, Investissement Quebec, has put measures in place to help local businesses, complementing what the Canadian government has done, Premier Francois Legault said in a press conference in Quebec City Thursday.
“Staff at Investissement Quebec is already speaking to hundreds of companies, but we will do all we can to save the maximum of companies, especially the ones of strategic importance like Aldo,” he said.
Aldo, which also sells accessories such as handbags, was founded by Bensadoun’s father, Aldo Bensadoun, in 1972.
By Paula Sambo and Eliza Ronalds-Hannon