A major dispute has erupted in the bankruptcy proceedings of Canadian luxury fashion retailer Ssense, with a powerful group of lenders attempting to block a deal that would allow the company's founders to regain control.
Lenders Challenge Court-Approved Deal
In court filings this week, a consortium of creditors led by Bank of Montreal (BMO) is seeking to stop a founder-led buyout of Ssense's parent company, Atallah Group. Instead, the group is asking a judge to authorize an orderly liquidation of the retailer's assets. The lenders argue this path would allow them to recover tens of millions of dollars more cash.
The lender coalition, which also includes Royal Bank of Canada, JPMorgan Chase & Co., National Bank of Canada, and Bank of Nova Scotia, is collectively owed approximately $113 million. In their legal arguments, they stated that accepting the founders' offer would force them to absorb an unfair and unreasonable financial loss when a more profitable alternative exists.
Quebec Government and Extensive Sale Process
The opposition doesn't end with the banking group. Investissement Quebec (IQ), the provincial government's financial arm, has also formally contested the founders' bid. In a notice filed on Wednesday, January 15, 2026, IQ stated the purchase price is "significantly insufficient." Ssense owes IQ more than $21 million.
The contested bid was submitted by an entity controlled by Ssense's founders and was approved by the court-appointed monitor, Ernst & Young (EY). This approval came after a months-long sale process conducted under the Companies' Creditors Arrangement Act (CCAA). Court records reveal the process was extensive, with advisers contacting 170 potential bidders. Ultimately, 51 parties signed non-disclosure agreements, but only the founders' binding offer complied with the final court-approved process in December 2025.
Jobs and Liabilities Hang in the Balance
The monitor, EY, has advocated for the founders' proposal, stating it presents several key advantages over liquidation. The deal would preserve more than 760 jobs, most of which are located in Quebec. It would also allow Ssense to continue operating as a going concern, honor an estimated $19.5 million in customer returns, and assume dozens of supplier contracts. EY concluded that creditor recoveries under this plan would likely be no worse than through liquidation, but with significantly less execution risk.
However, the lender group remains unconvinced. They assert that no liquidation bids were submitted during the final sale round not due to a lack of interest, but because the process rules were skewed. The financial institutions are now pushing for a judicial decision that prioritizes their cash recovery, setting the stage for a pivotal court battle that will determine the fate of one of Canada's prominent online luxury retailers.
