TORONTO — Retailer Mendocino Clothing Co. has filed for insolvency and plans to close its stores to focus on online orders, adding to the growing list of Canadian businesses that are shutting their doors this year.
The Toronto-based women’s wear brand filed a notice of intention on July 14 to make a proposal under Canadian bankruptcy law, according to documents posted on the website of the trustee KSV Kofman Inc.
While the company previously announced that it would be gradually reopening some of its 28 Mendocino and M Boutique stores across the Greater Toronto Area after closing in March due to the COVID-19 pandemic, it’s now started restructuring proceedings to shift most of its business online.
“As a result of challenges resulting from the pandemic, the company recently made the very difficult decision to discontinue all or substantially all of their store operations and to focus on an e-commerce model,” the trustee said in the documents.
“The protection resulting from filing the NOI will provide the stability required in order to advance and execute the company’s restructuring plan.”
The notice of intention is the formal first step in filing under Canada’s Bankruptcy and Insolvency Act. The filing gives Mendocino a temporary stay against any proceedings by its creditors.
The documents listed Toronto-Dominion Bank as a secured creditor owed $2.69 million, in addition to $5.78 million owed to unsecured creditors such as American Express and OPGI Mgmt.
Despite filing under the Bankrupcty and Involvency Act, KSV noted that Mendocino “is not bankrupt.”
Mendocino, which has been operating since 1987, joins retailers DavidsTea, Aldo, Victoria’s Secret, Bath & Body Works and more filing for creditor protection as businesses struggles to emerge from the economic impact of COVID-19.
