DavidsTea is seeking court protection from creditors while it negotiates leases for many of its stores, which have been shut since March 17 due to the COVID-19 pandemic.
The Montreal-based company says it’s seeking an initial order in Quebec Superior Court today to allow it to restructure under the Companies’ Creditors Arrangement Act. It says it also plans to seek similar orders for its U.S. subsidiary under Chapter 15 of the U.S. Bankruptcy Code.
DavidsTea, which wants to significantly reduce its brick and mortar footprint, says it plans to continue operating online through davidstea.com and its wholesale distribution channel.
It had warned in mid-June that it could begin a formal restructuring, depending on the outcome of its talks with landlords.
The company said at the time that it hadn’t paid rent on any of its stores for April, May and June.
DavidsTea’s founder and interim chief executive, Herschel Segal, says the goal of restructuring is to decrease losses caused by unprofitable stores and to continue wholesale and online sales.
© The Canadian Press