Luxury Retailer Ssense’s Founders Get Buyout Approval, Deal Closes

A founder-led buyout of Canadian luxury fashion retailer Ssense obtained court approval, despite a group of lenders seeking to block the deal and pushing for a liquidation process to recover more money.

“After months of uncertainty, the closing of the transaction marks an important milestone and affirms our ability to continue building Ssense for the long term,” the company said in an emailed statement. The deal closed on Feb. 13.

In a Feb. 4 decision, the Quebec Superior Court dismissed an attempt by a group of lenders to block a transaction allowing the brothers who founded the retailer to buy Ssense’s parent company, Groupe Atallah Inc., out of bankruptcy.

The lender group, which includes Bank of Montreal, Royal Bank of Canada, JPMorgan Chase & Co., National Bank of Canada and Bank of Nova Scotia, was owed about 113 million Canadian dollars ($82.7 million) as first-ranking creditors. Groupe Atallah also owed RBC tens of millions of dollars related to an automation system in the fulfilment centre, and 21 million Canadian dollars to Investissement Quebec for the same system.

The founders bid about 78 million Canadian dollars, including a cash payment of 59 million Canadian dollars, according to a court document. The transaction was deemed higher than the net liquidation value of the inventory.

It’s far from the 5 billion Canadian dollars valuation Ssense received in 2021 when Sequoia Capital made a minority investment in the family-run business from Montreal that turned a minimalist website into a luxury destination for shoppers in search of everything from Stella McCartney’s balloon trousers to obscure Japanese avant-garde labels.

The purchase entails almost all of the debtors’ assets, including inventory and accounts receivables, excluding equipment subject to leasing agreements with RBC. Ssense expects to retain approximately 660 regular employees and 100 occasional on-call employees — out of the more than 1,160 people it employed last year — in the process.

In the decision, Justice Andres C. Garin accounted for estimates of the proceeds from liquidating inventory, as well as the preservation of commercial relationships and the economic and social impact of the loss of hundreds of jobs. “Families who lose a source of income are deeply affected,” he wrote. “Society in general suffers as well.”

Court records show the sale process was extensive, with a teaser sent to 170 parties. Fifty-one signed non-disclosure agreements. In the final round, Australia-based Cettire Ltd. made a bid, but it was turned down.

Ernst & Young LLP acted as the court-appointed monitor in the matter, and its mergers and acquisitions team ran the sale process.

Ssense was founded in 2003 by chief executive officer Rami Atallah and his brothers, Firas and Bassel. The retailer, which does most of its business online, has a physical location in Montreal’s touristy Old Port neighbourhood, as well as a distribution centre in a nearby suburb.

By Mathieu Dion, Paula Sambo

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Ssense Founders Win Bid to Retain Ownership

The company announced on Sunday that the Atallah family will remain owners of the Montreal-based luxury e-tailer, in partnership with a Canadian multi-family office, in a transaction pending regulatory approval.