The story of SSENSE is not over yet Yesterday, the company was granted an extension until next February to reorganize itself.

In fashion, rather than sudden collapses, there are slow-motion implosions. And often a bankruptcy does not mean the end. This is somewhat what is happening with the collapse of SSENSE: hit by U.S. tariffs in an already weak luxury market, the company first tried to cut staff, then found itself locked in a standoff with creditors who wanted to force its sale, and finally had to seek protection under Canadian law to avoid disintegration and attempt to restructure.

From there began a complex tug-of-war of valuations and offers, refinancing and restructurings that seems to have no end, under the sword of Damocles of a debt hovering around 371 million Canadian dollars. Yesterday, the Quebec Superior Court issued a new stay of proceedings until February 19, granting SSENSE a couple of extra months to reorganize its operations and stave off the advance of creditors, banks, and suppliers.

Where do we stand with SSENSE’s bankruptcy?

The decision by the Canadian court is the most recent in a series of extensions granted to SSENSE since last September, when the retailer filed for creditor protection under the Companies' Creditors Arrangement Act, a law known by the acronym CCAA. The initial request came in response to pressure from creditors, who had launched actions to force the sale of the company and recover the accumulated debts.

Around mid-September, SSENSE obtained interim financing of 40 million Canadian dollars (about 28.8 million U.S. dollars), although documents filed with Ernst & Young reveal much higher debts. The most scandalous part of the entire affair, however, came at this point, as Ernst & Young published the list of brands the retailer still owed money to: a list full of independent brand names that were precisely the brands everyone believed SSENSE championed.

Throughout the whole affair, the current CEO Rami Atallah has not ruled out a sale if things were to take a turn for the worse (in that case the hypothetical scenario would be similar to that of Farfetch), but the feeling is that he wants to hold on tightly to the company. As early as September, Atallah announced that he and his two brothers, all founders of SSENSE, would submit their own bid. But now it appears that several investment and refinancing proposals are also being evaluated.

At the beginning of the month, the deadline for the submission of qualified bids by potential buyers was postponed to December 8, but little else is known. Clearly, if a savior had arrived to revive the brand, it would have been announced, so it is likely that the situation is still pending. In general, the company has stated that «requests to extend the stay of proceedings will continue to be submitted to the court, as necessary, until a successful exit from the CCAA proceedings».

How will the SSENSE story end?

It is clear that, if an extension has been granted, the Atallah family has not found a solution to its problems. It is possible that, behind closed doors, investment funds or large companies operating in e-commerce were contacted, without however finding appealing buyers. After all, no one wants to pay too much for a lame horse. It nonetheless seems clear that if the process is not concluded by February, it is likely that a new extension could be granted.

Currently, according to industry insiders, the real damage for SSENSE is reputational as well as economic. Numerous owners of small brands that were also successful online, as well as more established brands such as Auralee or Lemaire, found themselves on the blast front of this affair and, in some cases, completely broke. It is undeniable that the recent financial disasters of major luxury e-commerce players will change not so much the way big commercial brands operate (they have been narrowing their retailer networks for years in favor of direct sales) but rather smaller and independent brands which, paradoxically, were precisely those for whom SSENSE was most essential.

Takeaways

- The crisis at SSENSE increasingly appears to be a slow implosion, worsened by an already fragile luxury market, U.S. tariffs, and a debt of approximately 371 million Canadian dollars.

- To avoid a forced sale and bankruptcy, the company sought protection under Canada’s CCAA law, obtaining multiple extensions to restructure and seek new financing or investors.

- Despite interim financing and the possibility of a sale, the situation remains uncertain, and the Atallah family appears intent on maintaining control while evaluating various options.

- The most significant damage seems to be reputational as well as economic, with particularly severe consequences for the small independent brands tied to the platform.