Groupe Dynamite Inc. Files for Creditor Protection Under the Companies' Creditors Arrangement Act

MONTRÉAL, Sept. 8, 2020 /CNW Telbec/ - Groupe Dynamite, Inc. (GDI) announced today that it has secured court protection from its creditors under the Companies' Creditors Arrangement Act, "CCAA", in order to restructure its business and financial affairs, as a direct result of the COVID-19 crisis. Its application under the CCAA was heard this morning by the Superior Court of Québec, Commercial Division. The Court granted the initial order sought, and Groupe Dynamite, Inc. will seek its immediate provisional recognition in the United States under Chapter 15 of the US Bankruptcy Code in the United States Bankruptcy Court.

After record performance in 2019, Groupe Dynamite, Inc. was again exceeding expectations early in 2020, but COVID-19 caused an unexpected and unsustainable strain on the business. The ongoing pressures of store closures, social distancing measures, closed borders adding to lack of tourism and global economic uncertainty, which have no end in sight, have led the Montreal-based retailer and its Board of Directors, to face the reality of a new retail paradigm and proactively restructure their business model.

Groupe Dynamite, Inc. and their two brands, Garage and Dynamite, have been a cornerstone of the Montreal retail community since 1975, when the company was founded. Andrew Lutfy started with the company as a stock clerk in 1982, but quickly took over operations for the business, and was promoted to President of the entire organization in the mid-80s. Mr. Lutfy became the sole shareholder in 2002. Under his vision and leadership the Garage and Dynamite brands have thrived servicing their young, vibrant, and fashion forward customers. The company has profitably grown and expanded from the first store in Place Versailles to currently over 300 stores across North America, including 85 in the USA.

Throughout the years, Groupe Dynamite, Inc. has continued to positively evolve. In late 2019, they put in place a legal Board of Directors, and had recently hired a new President and CEO, Liz Edmiston, as part of an ambitious strategy to build their brands and digital capabilities to compete on a global scale. That was until the pandemic hit in mid-March.

"This pandemic has created a corporate tsunami" said Andrew Lutfy, Executive Chairman. "At the end of the day there are many things we control, but unfortunately not the impacts of this global pandemic. We've come to terms that the impacts of COVID-19 will be felt until such time as we can dance at weddings and crowd into office elevators, and have open borders without quarantine restrictions. Fundamentally, until we and others can offer the vaccine free of charge to our employees. Our digital channels have experienced incredible growth over the past six months, but unfortunately not enough to offset empty city centres, and change of consumer needs as a result of work from home policies. However, in these uncertain times our strong brands make customers happy, and emotional connections matter. The last six months have accelerated a digital revolution and we must rapidly course-correct our business model to reflect this important shift. Therefore, making this incredibly emotional and difficult decision at this time speaks to our deep responsibility towards all of our employees, customers, secured creditors and key stakeholders, and we are confident the outcome will result in a stronger business model that can thrive - even in a crisis."

Mr. Lutfy also stated that this restructuring will have absolutely no impact on the 530 Head Office and warehouse employees, and minimal impact to their 3800 store employees who will be offered transfer or relocation options should their store close.  Additionally, there will be no negative impact on any of his other affiliated businesses or investments.

While a comprehensive restructuring plan is being developed, Garage and Dynamite will continue to deliver the same exceptional customer experience and service, across all touchpoints in stores and online. Business operations will not be interrupted. The leadership team will work closely with business partners and stakeholders to secure their support for a successful restructuring.

"Our brands are strong and we have an extremely talented and agile team. We reacted immediately to the rapid change in our business, by reworking our assortments, proactively managing inventory levels, and pivoting our focus on digital transformation - even launching a new website platform and necessary system upgrades during this time.  We reacted to everything within our control, unfortunately the impact of the virus is out of our control, and we must take a pragmatic approach to the business. We will now be focused on creating a new operating structure that makes sense in this business climate, supports our current plans to drive brand equity and relevance with our customers, and allows us to get back on track with our strategic goals and objectives", said President and CEO, Liz Edmiston.  

Ms. Edmiston also confirmed that Mr. Lutfy is prepared to provide interim financing as a sign of his commitment to the leadership team and its business strategy.

With its deep understanding of the retail industry, experienced leadership team, dedicated employees and loyal customer base, Groupe Dynamite, Inc. is looking to emerge from the restructuring more competitive and better positioned for the future, in any economic climate.

Groupe Dynamite, Inc. will provide a further update on these matters once more information is available and will not comment until further notice.

About Groupe Dynamite, Inc.

Groupe Dynamite, Inc. (GDI) is a Montreal-based privately held global retailer designing and creating accessible fashion since 1975. The retailer's two leading clothing and accessory brands, Garage and Dynamite, are at the core of its success. Operating over 300 stores across North America, GDI offers style-focused consumers an omnichannel shopping experience.

At fashion's forefront in North America, Groupe Dynamite's agile and innovative executive team understand that success and longevity are fueled by a creative and inclusive culture.  Groupe Dynamite Inc. is the recipient of the prestigious Montreal Employer of the Year Award and Canada's Top Employer for Young People Award.  For more information, please visit: www.groupedynamite.com.

SOURCE Groupe Dynamite Inc.

Constance Léonard-Tessier, [email protected], [phone]