Prominent Canadian retailer Mastermind Toys has filed for creditor protection as it says the challenges facing the company are “too significant to overcome.”
Mastermind Toys, which has 66 stores across Canada, said Friday it has obtained an initial order for creditor protection under the Companies’ Creditors Arrangement Act (CCAA) from the Ontario Superior Court of Justice in Toronto.
All of its stores remain open for business, and all current sales and holiday promotions will continue in stores and online, the company said in a news release.
“The difficult but necessary decision to seek creditor protection under the CCAA was made following careful evaluation of available alternatives and in consultation with legal and financial advisors,” it said.
“Over the past several years, Mastermind Toys has faced a range of challenges including increasing competition, disruptions from the COVID-19 pandemic, and more recently a deteriorating macro-economic environment.”
Mastermind Toys added that despite implementing several operational improvements and cost reductions, and undertaking an extensive strategic review and robust sale process, “the challenges facing the company’s business have become too significant to overcome.”
During the CCAA proceedings, Mastermind Toys said it intends to seek the court authorization to commence a store closure process for an initial group of locations. In the meantime, it will explore strategic alternatives for the remainder of the company’s stores.
It did not specify how many locations would make up the store closure process.
Mastermind Toys added it expects to seek additional relief from the court at a Nov. 30 hearing.
Brothers Andy and Jon Levy founded Mastermind in 1984, starting off in a 300-square foot shop in Toronto offering educational software to families excited about their new home computers, the company’s website states.
The brothers expanded the company over the decades and brought in Birch Hill Private Equity Partners to expand its Canadian footprint in the 2010s. They eventually retired before the end of the decade with Sarah Jordan taking over the company as CEO in 2020.