Ssense and its creditors are about to go to battle.
The troubled Montreal-based retailer has filed the Canadian equivalent of bankruptcy and put itself up for sale — a process that is in direct conflict with a plan expected to be put forth by its management team.
In an internal memo obtained by WWD, chief executive officer Rami Atallah informed employees that Ssense has applied with the court to place the company under Companies’ Creditors Arrangement Act protection to begin a sale process. But he stressed: “We do not believe this is the right path for Ssense. Recently, we have worked closely with financial and legal advisers to develop our own restructuring plan to stabilize the business and rebuild it for the future.”
He wrote that management believes that its plan is in “the best interests of our employees, customers and vendor partners.”
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And as a result, it plans to file its own CCAA application “to protect the company, keep control of our assets and operations and fight for the future of our company,” Atallah wrote.
Once that filing is complete, both applications will go before the court, which will decide the go-forward plan for the business, a process the CEO expects to be decided within the next week. “Until then, our focus remains clear: protect value, stabilize the business and set up a restructuring plan to secure our future,” Atallah said.
The CEO attributed Ssense’s financial issues to a dramatic shift in the last year “with tighter liquidity and increased trade pressures.” That was exacerbated by the elimination of the de minimus exemption on goods shipped worth under $800 to the U.S., which led the company’s primary lender to file the CCAA “without our consent. Together, these created an immediate liquidity crisis no short-term fix could solve.” Restructuring under CCAA was the only solution.
Atallah said the plan will be to communicate the company’s issues to vendors and suppliers within the next 24 hours.
Ssense, once a leading retailer for luxury, avant-garde and streetwear brands, has been struggling since last year when the high-end market began to show signs of strain. The company has already laid off more than 100 people, according to sources, started discounting heavily, and had stopped paying deposits to emerging brands.
A spokesperson for Ssense told WWD, “Over the past several months, we have worked tirelessly and in good faith with our financing partners to secure an agreement that would recapitalize and restructure the business in light of significant economic headwinds facing the retail sector, including the elimination of the U.S. de minimis exemption. While we sought a collaborative path forward, our primary lender has chosen instead to place the company under CCAA protection and commence a sale process without our consent. We are deeply disappointed in this decision, which we believe does not serve the long-term interests of our 1,000-plus employees, vendors and partners.”
The company said it will “fight for the future of this business. Our mission is more relevant than ever: to discover and champion emerging creative talent. With a loyal global customer base, strong brand recognition, and the resilience of a digital-first model, we believe in the fundamental strength of our business. This process will give us the time and stability we need to restructure on our terms, protect the interests of our employees and partners, and emerge stronger for the future.”
Ssense was founded in 2003 by brothers Rami, Firas and Bassel Atallah. The company, which is primarily an e-commerce business, operates a flagship in Montreal. It targets men and women between 18 and 40.
