Bombay, Bowring under court protection while looking for solution to debt problem
TORONTO - Retailers Bombay & Co. Inc., Bowring & Co. Inc. and Benix & Co. Inc. are operating under court protection from creditors while their owners look for a buyer or partner to help them survive a severe cash shortage and overwhelming debt.
Bombay has 55 furnishings stores and Bowring has 57 housewares stores across Canada, employing about 1,240 people in total. Benix closed its final store in June.
The retailers collectively owe about $80-million, including $14.5 million to CIBC (TSX:CM), which is providing funds to help them keep operating while they work on a new business plan under court supervision.
An Ontario Superior Court judge granted a stay until Sept. 5 last week under the Companies' Creditors Arrangement Act, which is designed to give insolvent companies another chance to come up with a workable business plan.
In an affidavit filed Aug. 6, CEO Freddy Benitah testified that the privately owned chains have been grappling with a a liquidity crisis and have defaulted on other financial covenants with their primary lender, CIBC.
The companies also ow $28.5-million to Isacc Bennet Sales Agencies Inc. and $11-million FBI, which are secured creditors, and an estimated $25-million in unsecured debts.
The trio of Canadian retailers have struggled in the face of growing competition from U.S.-owned rivals that have migrated north.
The Benitah family also privately owns the Fairweather and International Clothiers chains.
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