May 19, 2020 / 7:48 PM / in 18 days

UPDATE 1-Canada's Reitmans seeks bankruptcy protection as COVID-19 shuts stores

(Updates with details from court order)

May 19 (Reuters) - Reitmans Canada Ltd on Tuesday obtained preliminary approval to seek bankruptcy protection under the Companies’ Creditors Arrangement Act, the latest retailer seeking to restructure its operations as the COVID-19 pandemic causes prolonged store closures.

Reitmans, which was founded in 1926 and retails fashion apparel through 576 stores across Canada and online, said it obtained the order from a Quebec court, leading to an operational, commercial and financial restructuring.

“Filing for protection under the CCAA is truly the hardest decision we have had to make as an organization in our almost one hundred years of history, but this pandemic has left us no choice,” Chief Executive Officer Stephen Reitman said in a statement.

Under the terms of the order, Ernst & Young Inc has been appointed to assist Reitmans in formulating its restructuring plan, the company said.

The company will remain open through its ecommerce websites while it restructures and all brick-and-mortar stores will re-open in line with government guidelines.

Reitmans’ application follows Aldo Group Inc, which began a court restructuring process earlier this month. It also falls on the day when select retailers and auto dealerships in Ontario opened their doors to customers after two months of lockdown.

Both sectors have been hard hit by the pandemic, with retailers around the world face unprecedented disruption and heavy debt piles brought on by the disease outbreak.

Earlier this month, U.S.-based J.C. Penney Co Inc filed for bankruptcy protection, following both luxury department store chain Neiman Marcus Group and clothing retailer J. Crew Group Inc.

Reitmans, whose brands include Penningtons, Addition Elle and Thyme Maternity, employs 6,800 people. (Reporting by Noor Zainab Hussain and Abhishek Manikandan in Bengaluru; Editing by Maju Samuel and Krishna Chandra Eluri)

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