Canada’s DavidsTea Plans Bankruptcy After Covid-19 Losses
(Bloomberg) -- Specialty tea store DavidsTea Inc. will seek protection from its creditors after Covid-19 shutdowns closed its shops and kept customers at home.
The Canadian chain is using the Companies’ Creditors Arrangement Act, with a hearing expected today in Québec Superior Court, and expects to file for Chapter 15 bankruptcy in the U.S., according to a company statement.
The financial collapse adds to the list of retailers that were already struggling, and then wound up in bankruptcy after the coronavirus pandemic drained sales. The company hadn’t paid rent from April according to a regulatory filing in mid-June. All of its stores in North America shut down in mid-March and remain closed.
DavidsTea expects to pursue talks with landlords about more favorable terms, and may terminate “a significant number of our 222 leases.”
The chain opened in 2008 and has become a favorite among millennials and Generation Z with its tea care packages and assortment of matcha. But the Montreal-based company, which also operates stores in the U.S., has struggled for years, reporting a net loss in fiscal years 2017 through 2020.
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