Canadian retailer Frank and Oak files for creditor protection with $71M in debt, Canada Reviews

Montreal-based fashion retailer behind three Toronto stores, Frank and Oak, filed for creditor protection last month for the second time, citing almost $71 million in debt owed to over 100 creditors.

The brand known for its eco-friendly and minimalist fashion isn’t the only Canadian company seeking creditor protection — Comark Holdings Inc., the parent company of Canadian mall retailers Ricki’s, Cleo and Bootlegger, also filed for creditor protection recently, with plans to close all locations of the former two stores and scale down operations for the latter.

Frank and Oak previously filed for bankruptcy protection in 2020 under its corporate name Modasuite, eventually making a sale to New York-based parent company Unified Commerce Group (UGC). In court filings on Dec. 16, UGC revealed Frank and Oak is planning to restructure its operations, but all 15 stores in Canada, including its three Toronto stores, will continue to operate as usual.

Secured creditors, UGC And Desjardins, are owed $55.5 million, while unsecured creditors are owed just under $14.6 million — including $1.7 million to the Canadian Revenue Agency, $10,510 to Canada Post and $3.5 million to Canadian Border Services Agency. The company also currently owes over $830,000 in accrued salaries and vacation.

In a letter to creditors, CEO Of UGC Dustin Jones noted that the brand “struggled to recoup losses experienced in the aftermath of the COVID-19 pandemic,” and identified a potential way forward. “[T]he company is signalling its commitment to find a viable path forward, with the goal of securing a more stable future for all stakeholders involved.”

According to a press release obtained by CBC News, Frank and Oak will be searching for an investor or buyer for the brand as a possible solution.

Toronto fans of Frank and Oak can still shop in-store at their locations on Queen West, in the Eaton Centre and in The Well. Ricki’s and Cleo’s locations, including one in Etobicoke and one in Vaughan, will undergo liquidation, after which point all stores will close. As of Jan. 17, the stores will not accept returns or gift cards and will not be able to process loyalty points, according to a statement on the Ricki’s website.