A court has granted fashion retailer Ssense temporary protection from lenders who are looking to quickly sell the insolvent business, The Logic has learned. 

CEO Rami Atallah told the company’s more than 1,000 employees on Aug. 29 that the court had granted a temporary stay of proceedings to delay creditors from taking action against the company. The stay was granted after Ssense’s lenders filed for protection under the Companies’ Creditors Arrangement Act (CCAA), according to an internal email viewed by The Logic. 

CCAA records have not yet been made public. The company declined The Logic’s request for comment on the duration of the temporary protection.

Ssense intends to file for creditor protection after its lenders submitted their own CCAA application last month, asking the Superior Court of Quebec to place the company under a monitor and sell the firm.

“At this stage, the lenders have lost confidence in Ssense Group’s ability to oversee its operations,” the group said in the application led by Bank of Montreal. Other lenders included RBC, Scotiabank, National Bank and JPMorgan Chase. The company had $420 million in assets and $517 million in liabilities as of June 30, and owed lenders about $145 million, according to Bloomberg.

The lenders’ application claimed Ssense underrepresented critical aspects of its financials, including inventory problems. They are pushing for a fast sale of the company and suggested non-binding offers for Ssense be submitted by Oct. 6 and that the company’s inventory be sold this month. 

In an Aug. 28 email to employees, Atallah blamed U.S. trade policy for Ssense’s troubles. He noted the end of the de minimis exemption—a rule, which ended this month, that allowed parcels valued up to US$800 to enter the U.S. duty-free—as a main reason for the company’s liquidity crisis. Still, Atallah believed the company could rehabilitate the business without being sold, putting him at odds with the company’s lenders.

Ssense was founded by Atallah and his two brothers in 2003. The company has since grown into a global online marketplace of nearly 800 brands ranging from the biggest luxury fashion houses to upstart designers. 

“We believe in the fundamental strength of our business,” Ssense spokesperson Olive Leatherwood told The Logic last month, as the company sought creditor protection. “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.”

Atallah told employees the company intends to maintain business-as-usual during the CCAA proceedings. He said Ssense will keep its Montreal and New York offices open and asked that employees in those cities show up to work in person.

Correction: Ssense has been granted a stay of proceedings. This story has been updated.