By Adriano Marchese
LXRandCo will consider selling off all its assets to avoid bankruptcy days after warning of potential liquidity issues on the horizon.
The embattled Canadian retailer of pre-owned luxury handbags and accessories said Friday that it has filed a notice of intention to make a proposal which will consider a sale of all or most of the company’s assets.
A notice of intention to make a proposal is often the first stage of a restructuring process under the Canadian Bankruptcy and Insolvency Act that allows a financially troubled company to restructure.
On Monday, LXRandCO warned that it could face liquidity issues amid economic headwinds that have put pressure on consumers’ discretionary spending. It said that this has led to generating lower-than-expected revenue in the third quarter, and that it may be in breach of certain banking covenants that would result in liquidity issues in its fourth quarter.
LXRandCo at the time said it was in discussions with its bank lenders regarding possible alternatives to address the financial situation, but cautioned there could be no assurance of any particular outcome.
Later in the week, company’s auditor resigned without providing a reason.
In early August, the company reported that in the first half of the year, revenue fell nearly 24% to 7.4 million Canadian dollars ($5.4 million).
On Friday, the company said each of its directors resigned, and that KPMG was appointed as proposal trustee.
Write to Adriano Marchese at [email protected]
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