The founders of Ssense have won round one in their battle with their creditors, allowing the company to remain in the hands of chief executive officer Rami Atallah and his brothers Firas and Bassel, who are fighting to remain in business and restructure the company’s operations.
At the end of last month, as reported, the troubled Montreal-based retailer filed the Canadian equivalent of bankruptcy and its creditors filed an application to put the retailer up for sale — a process that was in direct conflict with a restructuring plan put forth by the Atallah family.
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On Friday, the court ruled that the current management team and the company’s board could remain in place and oversee a restructuring plan. To ensure transparency and accountability, the court appointed Ernst & Young Inc. to act as monitor. As such, Ernst & Young will oversee the restructuring process and maintain a website where information regarding the proceedings can be obtained.
As part of the restructuring, claims against Ssense for amounts owed prior to Aug. 29 will be addressed through a court-approved claims process, while payments for goods and services provided after that date will “continue as normal,” the company said, using the $40 million in interim financing approved by the court on Friday. That figure consists of $15 million from a group of banks and $25 million from the Atallah family.
Ssense, which had sales of $1.3 billion last year — $1.23 billion of which came from online sales — has $371 million in debt, with $229 million owed to banks and vendors. At its peak, after the pandemic, sales were $5 billion, according to the court papers.
“Today’s court decision is a critical step, marking the beginning of our next phase,” sad Rami Atallah. “With the support of our lenders, we now have the foundation to develop and implement a restructuring plan aimed at securing Ssense’s long-term future. Our priority remains protecting our employees, customers, and partners, and we are committed to rebuilding their trust. We are grateful for the unwavering support of our community, which reinforces our global relevance and the strength of our brand. We now have the time, resources, and structure in place to begin the process of rebuilding a stronger Ssense.”
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. The elimination of the de minimus exemption, which allowed goods under $800 to ship into the U.S. tariff-free, was particularly harmful to Ssense, which counts 59 percent of its customer base in the U.S. and has an average order size of $549, the court papers said.
The company was founded in 2003 by the Atallah brothers and is primarily an e-commerce business targeting men and women between the ages of 18 and 40. It now has 1,161 employees globally, and also operates a flagship in Montreal.
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