Designer fashion retailer Ssense faces a liquidity crisis and plans to imminently file an application in bankruptcy court to protect its assets from indebted lenders, The Logic has learned.

In an email sent to all staff this morning, the Montreal-based firm said its hand was forced by its main creditor, which it says filed its own application to sell the company, without Ssense’s consent, under the Companies’ Creditors Arrangement Act (CCAA). 

“We do not believe this is the right path for Ssense,” reads the email viewed by The Logic. 

The email, sent from CEO Rami Atallah’s address, says the company has developed a plan with financial and legal advisors to “stabilize the business and rebuild it for the future,” which is planned to file as its own CCAA application within 24 hours of sending the memo. “We believe this plan is in the best interests of our employees, customers, and vendor partners,” the email said. 

In an email confirming the plans, Ssense spokesperson Olive Leatherwood told The Logic, “We believe in the fundamental strength of our business. This process will give us the time and stability we need to restructure on our terms, protect the interests of our employees and partners, and emerge stronger for the future.”

The insolvency follows multiple rounds of layoffs at Ssense this year as the firm tried to conserve cash amid trade concerns and global economic uncertainty. The firm also clawed back parental leave benefits and froze bonuses and promotions, sources previously told The Logic. 

“Over the past year, market conditions have changed dramatically,” the company told employees Thursday. Ssense pointed to the end of the de minimis exemption—a rule that expires tomorrow, which allowed parcels valued up to US$800 to enter the U.S. duty-free—as a main reason for the company’s predicament. It also blamed “the filing by our primary lender of a creditor-initiated CCAA application without our consent.” 

“These events caused an immediate liquidity crisis that no short-term solution could address,” the email reads. “After exploring all options, we have concluded that a CCAA restructuring is the only way to continue our operations.”

Ssense didn’t say which creditor triggered the CCAA process. 

The company sold a minority stake in the business to Silicon Valley investment giant Sequoia Capital in 2021 for an undisclosed amount that valued Ssense at about $5 billion. It was the first time the firm—founded by Atallah and his two brothers in 2003—took outside funding. The company was on track to bring in more than US$750 million in revenue that year.

Since then, there’s been a global decline in online shopping after a pandemic-era boom. In 2023, the company made its first round of layoffs in its 20-year history, cutting 138 staff in January 2023, representing seven per cent of its workforce at the time. The company cited “a shift in consumer online shopping back to pre-pandemic levels” as one reason for the cuts.

Ssense had nearly 1,900 employees as of Dec. 9, 2024, according to PitchBook.

U.S. President Donald Trump’s trade policies have upended global commerce since the start of this year, with sweeping tariffs—or the threat of them—roiling businesses selling into the U.S. The protectionist policy has created difficulties for Ssense’s business. The online platform buys clothes and accessories from nearly 800 global brands and sells them to customers around the world, with the U.S one of its biggest markets.

The company said it intends to continue paying salaries and benefits through the CCAA process. “Despite some possible disruptions, Ssense intends to continue operations as normal,” it added. 

In its email to staff, Ssense said a court will hear its CCAA application and that of its lenders “in the coming days and will likely decide what to do next within the next week. “Until then, our priority remains to protect any value, stabilize the company, and prepare a restructuring plan to secure our future.”

Update: This article has been updated with comment from Ssense.