davidstea to implement restructuring plan
A necessary evolution
We have announced that we are implementing a restructuring plan under the Companies’ Creditors Arrangement Act (the “CCAA”) in order to accelerate our transition to an online retailer and wholesaler of high-quality tea and accessories.
During the restructuring process, we will continue to operate our online business through our e-commerce platform at davidstea.com as well as our wholesale distribution channel, through which we sell a selection of DAVIDsTEA products in grocery stores and pharmacies across Canada.
You have long told us that we are your “happy place.” As always, we will continue to brighten your day with positivitea, while providing the customer experience you know and love through davidstea.com.
We are happy to talk tea or to simply just talk, thanks to our engaged customer service team who can be reached via email@example.com and on our online chat.
For more information on the implementation of our restructuring plan, please see the Releases section by clicking here.
Why has DAVIDsTEA placed itself under the protection of the CCAA in Canada and equivalent laws in the United States?
Like many other retailers, DAVIDsTEA has been operating in a challenging brick-and-mortar retail environment. Following a careful review of available options to stem the losses from our brick-and-mortar footprint, we determined that a formal restructuring process is the best option in the context of an increasingly challenging retail environment, further exacerbated by the COVID-19 pandemic.
Through a restructuring, we intend to create a leaner and more efficient DAVIDsTEA and accelerate our transition to an online retailer, focused on becoming the leading online purveyor of loose-leaf tea and accessories in North America, complemented by our growing wholesale business. We believe the transformation of our business model is necessary to position us for a return to profitability.
What is the CCAA?
The CCAA, or the Companies’ Creditors Arrangement Act, is a federal law in Canada that provides certain insolvent companies with an orderly and supervised means to restructure their businesses. While CCAA proceedings are often used to restructure or sell a business, they are also used as an orderly and efficient way to wind down operations.
The Initial Order granting CCAA protection establishes what is known as a ‘Stay of Proceedings’. The Stay of Proceedings prevents creditors from taking action against the company, its directors and officers and its assets. This allows the company to continue to manage the day-to-day operations of the business for the benefit of the company and its stakeholders while it seeks to address its restructuring or wind-down objectives in an orderly and efficient manner.
Is a company that files for protection under CCAA considered to be bankrupt?
What is the difference between a proceeding under the CCAA and a proceeding under the Bankruptcy and Insolvency Act?
While there are many differences between CCAA and ‘bankruptcy’ proceedings commenced under the Bankruptcy and Insolvency Act (BIA), the CCAA provides the company with greater flexibility and the ability to remain in control of its day-to-day operations during its proceedings under the supervision of the Court-appointed Monitor. The CCAA and the Initial Order will provide a framework within which DAVIDs TEA can effect a responsible, controlled and orderly restructuring or wind-down. In a bankruptcy under the BIA, the company loses control of its assets and operations. A trustee in bankruptcy is appointed to liquidate the assets and distribute any value to creditors.
Once the company is granted protection under CCAA, who is in charge?
What is a Monitor?
Is there a public filing or disclosure required as part of filing for protection under CCAA?
Do I need to specifically request to receive any public Court documents?
How long will this process take?
Will my contracts and agreements be honored?
The stay of proceedings, established by Court order, prohibits any contractual parties from ceasing to perform their contracts on account of the CCAA filing or there being any outstanding amounts due as of the filing. The company will be paying for any post-filing goods and services provided during the CCAA protection period. The parties to any contract that the company seeks to terminate (or “disclaim”), will receive formal notice from the company. Any remaining outstanding obligations under disclaimed contracts will be addressed through a Court-approved claims process.
I have outstanding invoices that haven’t been paid yet. Who do I speak to about getting those paid?
How can I receive information related to the claims process?
Should I continue shipping product or providing services? Will I be paid for goods and services provided moving forward?
As a Creditor, what will happen to my relationship with DAVIDsTEA going forward?
We value our partners. DAVIDsTEA may continue to purchase your goods and services until the end of the CCAA process.
You should receive a formal communication from DAVIDsTEA, as applicable, indicating when DAVIDs TEA intends to terminate its contract or supply relationship with you. Please refer to that communication for the specifics of how DAVIDs TEA intends to handle its relationship with you between now and the end of the CCAA process.
How does the restructuring impact customers and are you going out of business?
No, the company is not going out of business—this entire process is to make sure that they can continue for many years to come. The company will remain fully operational during this restructuring process and are ready to serve you 24/7 at davidstea.com and in supermarkets and pharmacies across Canada.
DAVIDsTEA company policies, including gift cards, returns and exchanges, and loyalty program, among others, will also continue as usual.
Which stores are closing?
Will products change as a result of the filing?
Will gift cards still be honoured?
Will I receive items that I have ordered?
What will happen to my Frequent Steeper points and rewards?
Where can I find additional information about the CCAA proceedings?
Additional information regarding the CCAA proceedings of DAVIDsTEA is available at the Monitor’s website: www.pwc.com/ca/davidstea.
If you have any additional questions, please contact: