The pandemic has hit some businesses harder than others. Aldo Canada's sales, in particular, have really seen a negative impact. The company has now filed for bankruptcy protection.
In a May 7 news release, the shoe store confirmed that it had sought creditor protection in Canada, the United States, and Switzerland.
It also said that it would be using this opportunity to restructure and "stabilize" the business.
This is set to be carried out under the Companies’ Creditors Arrangement Act.
This specific section of Canadian law allows a business that owes more than $5 million to its creditors, but isn't doing well financially, to continue doing business while repaying its debts.
The objective is to keep business from completely collapsing under the pressure and effects of bankruptcy.
In this case, they will stay open during the restructuring period, continuing with online sales. It also said that it will reopen its retail stores in accordance with local COVID-19 restrictions.
CTV News reported that Premier Francois Legault said that he would be willing to help Aldo, which is headquartered in Montreal, and any other Quebec companies that were facing financial hardships.
According to a report from Bloomberg News (via the Financial Post), Aldo had previously struggled with sales due to the increase in more casual styles, particularly in workplaces.
The company's CEO, David Bensadoun, said that the company was previously making strong progress with its transformation, but that the current pandemic has put too much negative pressure on Aldo's cashflow.
"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," he said.
However, he remained optimistic about the fashion retailer's future saying "We will come out stronger and well-positioned to continue leading the way in fashion retail."