Canadian retailer Mastermind Toys will close some stores after obtaining bankruptcy protection.

An Ontario judge has issued an interim court order under the Companies’ Creditors Arrangement Act. The order granted Mastermind a stay of proceedings that protects the company’s entities from creditors and legal action until a November 30 comeback hearing.

In a news release, Mastermind said it will seek the court’s permission to close an initial group of stores while exploring “certain strategic alternatives” for the remainder. Mastermind attributed the “difficult but necessary decision” to challenges that have become “too difficult to overcome.”

Those challenges include increasing competition, disruptions from the COVID-19 pandemic, and, more recently, a deteriorating macro-economic environment.

Mastermind owns and operates 66 stores across Canada. Most are located in Ontario (35) and Alberta (13) with the bulk in power centres and plazas, according to a report from court monitor Alvarez & Marsal Canada.

Alvarez & Marsal is in talks with a potential purchaser of several stores, the Globe and Mail reported while citing an affidavit submitted to the court.

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