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May 16, 2017

Business and commercial bankruptcy: Express closing 17 stores

Citing the increased competition of online stores, a series of brick and mortar retailers across Canada, including in Ontario, have reported difficulties in staying afloat. This has led to several business and commercial bankruptcy filings. Therefore, the news that the Express clothing chain intends to close its 17 stores in Canada came as no surprise.

The holding company announced the intention to cease all operations in Canada and filed a petition to be protected from creditors' actions under the Companies' Creditors Arrangement Act. The chain claims the closure of its Canadian interests forms part of an overall restructuring process. Although initial plans in 2011 included the opening of 50 stores, the retail environment was found to be too challenging, and this, coupled with the unfavourable exchange rates, made it impossible to meet expectations.

Court documents show an estimated loss of $56 million US since 2011. According to the company's CEO, an expected $34 million US will accrue in costs related to the store closures, although a significant percentage could be written off against tax. Closing sales will precede the store closures, and the company endeavours to continue offering benefits and salaries to the 340 Canadian employees until mid-June.

The chain announced that outstanding gift cards -- valued at approximately $400,000 -- of clients in Ontario and other Canadian cities would be honoured. Company owners who find it hard, if not impossible, to keep their businesses afloat are wise to consult with an experienced commercial bankruptcy lawyer. With the guidance of lawyers who can provide the necessary assistance and support through bankruptcy proceedings, the adverse impact may be minimized.

Source: CBC News Business, "U.S. fashion chain Express to shut all 17 stores in Canada", Pete Evans, May 4, 2017