Oak + Fort Seeks Creditor Protection Amid Tariff Troubles
Vancouver Retailer Cites Expansion Costs and Trade Disputes
Canadian fashion retailer Oak and Fort Corp. has initiated court proceedings to shield itself from creditors, citing a rapid expansion strategy and escalating U.S. tariffs as key factors in its financial difficulties. The move impacts 42 stores across the U.S. and Canada.
Financial Strain and Missed Payments
The Vancouver-based company received an initial order under the Companies’ Creditors Arrangement Act (CCAA) on Friday and is simultaneously preparing a Chapter 15 bankruptcy filing in the United States. Problems intensified when Oak and Fort failed to meet rent obligations at the end of May, prompting landlords—particularly in the U.S.—to threaten eviction and seizure of merchandise.
Currently, the company owes over $25 million to its creditors. This includes $3.19 million in secured debt to the Business Development Bank of Canada, Royal Bank of Canada RY-T, Shopify Inc. SHOP-T, and more than $7 million in outstanding rent payments.
Aggressive Expansion Backfires
Founded in 2010 as an online retailer, Oak and Fort expanded into brick-and-mortar locations, which now generate the majority of its revenue. According to an affidavit sworn by chief executive officer Min Gyoung Kang, the company significantly accelerated its store openings in recent years. Following pandemic lockdowns, Oak and Fort secured leases for 26 new stores in both countries, capitalizing on available spaces. However, revenue growth from these locations did not meet expectations.
The retailer reported a net loss of $1.1 million in the fiscal year ending March 26, 2023, which widened to $10.6 million the following year. Most recently, Oak and Fort recorded $93.8 million in revenue with a net loss of $5.1 million for the fiscal year ending March 24, 2024, as detailed in documents filed with the Supreme Court of British Columbia.
Tariffs and Economic Uncertainty
Recent months have presented challenges for retailers due to the evolving U.S. trade landscape and increased tariffs. According to the National Retail Federation, tariffs cost American consumers an estimated $8.3 billion in 2023. National Retail Federation
“The recent change in the U.S. trade landscape with tariffs have directly caused an increase in supply chain and import costs,”
—Min Gyoung Kang, CEO
Kang’s affidavit further explains that these tariffs have squeezed profit margins, especially for retailers like Oak and Fort that source 68 percent of their clothing from China. The resulting uncertainty has also made lenders more cautious, tightening loan terms and, in some cases, denying Oak and Fort refinancing options.
Cost-Cutting Measures and Restructuring
Oak and Fort has implemented cost-reduction strategies, including reducing in-store inventory, which negatively impacted sales. The company is also negotiating with suppliers for extended payment terms and seeking more favorable lease agreements with landlords, but has yet to secure significant rent relief.
The company employs 601 individuals, with 434 based in Canada. Oak and Fort intends to continue operating its stores and online platform while pursuing financing and developing a business restructuring plan. Reflect Advisors LLC and KSV Restructuring Inc. have been engaged to manage the restructuring process.
According to the affidavit, “The financial difficulties currently facing the business have arisen only in the past year and, in Senior Management’s view, can be overcome with additional time to realign operations to focus on select profitable retail locations and e-commerce, and secure long-term funding to support the realigned business.”
