Several prominent Canadian retail names are ringing in the new year by seeking creditor protection and shuttering stores, the Canadian Press reported.

Comark Holdings, the parent company of Ricki’s, Cleo, and Bootlegger, alongside UCG Canada Holdings, operator of Frank and Oak, have both recently filed for bankruptcy protection on behalf of the chains as they grapple with financial challenges.

Vancouver-based Comark Holdings is a subsidiary of Mississauga, Ont.-based Comark Group. UCG Canada and Frank and Oak fall under the ownership umbrella of U.S.-based Unified Commerce Group.

Comark has filed for bankruptcy protection in accordance with the Companies’ Creditor Arrangement Act (CCAA.) UCG Canada has filed a notice of intention to make a restructuring proposal pursuant to the Bankruptcy and Insolvency Act.

Comark has announced that it will close all of Ricki’s and Cleo locations as part of a corporate-restructuring process. The company operates 75 standalone Ricki’s stores, 54 Cleo stores, and 20 shared locations.

Comark currently owns a total of 221 stores bearing the three brands.

“The company will continue to explore opportunities with respect to Bootlegger through the CCAA process, which will include reducing its retail footprint to better position the company in today’s retail environment,” said Comark in a news release.

According to an affidavit sworn by CEO Shamsh Kassam in the Ontario Superior Court of Justice (Commercial List), Comark has about $61 million in outstanding liabilities. The company is insolvent and cannot meet the liabilities, Kassam said.

Comark Holdings CEO Shamsh Kassam stated in an affidavit that “notwithstanding their best efforts to reduce expenses, preserve capital and improve profitability, the applicants’ liquidity position continues to rapidly deteriorate, particularly during the traditionally slower post-Christmas retail season.”

Frank and Oak CEO Dustin Jones has expressed confidence in the brand’s restructuring efforts.

“Be sure that we will work diligently on our restructuring plan to ensure our success with the goal of continuing our business relationship with you,” he wrote in a note to creditors.

Both Comark Holdings and UCG Canada have cited challenges from the COVID-19 pandemic, competition from ultra low-cost retailers, and supply-chain disruptions as contributing factors to the chains’ financial troubles. Kassam’s affidavit states that vendors have stopped shipping merchandise and issued legal claims against the company in Ontario and Manitoba.

Amid these closures, Toys “R” Us Canada has also announced the closure of five Ontario stores, CP reported. As Connect CRE Canada previously reported, the Body Shop Canada also plans to close some locations as part of a sale to an affiliate of Markham, Ont.-based Serruya Private Equity.

Despite these setbacks, retail analyst Liza Amlani of the Retail Strategy Group does not view the closures as a definitive sign of trouble for the sector.

She told CP that consumers are merely becoming “more cautious and intentional on what they are buying.”

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