David’s Bridal layoffs and bankruptcy in Canada

David’s Bridal, the largest seller of wedding gowns in North America, is filing for creditor protection in Canada after declaring bankruptcy. The Pennsylvania-based company has already filed under Chapter 11 in the U.S.

What they said: In a press release, David’s Bridal CEO James Marcum said that the “business continues to be challenged by by the post-Covid environment and uncertain economic conditions, leading us to take this step to identify a buyer who can continue to operate our business going forward.”

• “The company expects to file a recognition proceeding in Canada.”
• “We are determined to stay focused on our future, because we believe we have an important role in ensuring that every bride, no matter her budget, can have her perfect dress.”

Not the first time: It’s the second time that David’s Bridal has gone bankrupt since 2018. The company claims it “made progress” since its previous bankruptcy, but is “suffering under severe liquidity constraints.”

• The number of weddings have increased since the start of the pandemic in 2020, but they are still below pre-pandemic levels.
• Fewer people are getting married in the United States, with rates continuing to decline since the early 1980’s, according to the CDC.
• High Inflation is also having an impact on personal spending habits and budgets.

Impact in Canada: There are currently 12 David’s Bridal stores across Canada, including locations in Calgary, Cambridge, Edmonton, Hamilton, Langley, London, Mississauga, Ottawa, Scarborough, and Vaughan.

• The employer is laying off over 9,000 full and part-time employees – or approximately 90% of its workforce – with an unknown number affected in Canada.
• It will keep its stores and website operating so it can fulfill orders, and will still accept gift cards, returns and exchanges.
• David’s Bridal is looking for a buyer, but will have to close its doors permanently and liquidate if it is unsuccessful.

Severance pay for David’s Bridal employees in Canada

Non-unionized employees at David’s Bridal are owed a full severance package from their employer when they lose their job. This includes hourly, part and full-time workers, and independent contractors as well.

Depending on various key factors, proper severance pay can total as much as 24 months’ pay. The Ontario, Alberta and B.C. employment lawyers at Samfiru Tumarkin LLP have secured fair and complete termination packages for tens of thousands of Canadians since 2007.

An employee is still entitled to appropriate severance pay if the business closes its doors permanently, but doesn’t declare bankruptcy or creditor protection through the Company Creditor Arrangement Act (CCAA).

However, in the event of a company filing for bankruptcy protection through the CCAA, laid off or fired employees are unlikely to see much, if any, severance pay. The reason for this is that secured creditors, like banks, are at the front of the line for any funds generated through the bankruptcy and restructuring process, while unsecured creditors, such as employees, are at the back of the line.

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