Trump’s Decision on De Minimis Helped Sink Luxury Retailer Ssense

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(Bloomberg) — The end of a duty exemption for small shipments to the US was the last straw for Canadian luxury fashion retailer Ssense, according to a court filing in the company’s bankruptcy-protection case. 

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A group of creditors led by Bank of Montreal were seeking repayment from Ssense under Canada’s Companies’ Creditors Arrangement Act and force a sale of the company. Both sides reached an agreement instead to have Ssense file the application for creditor protection, Justice Andres C. Garin of the Quebec Superior Court said in an order.

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“With the support of our lenders, we now have the foundation to develop and implement a restructuring plan aimed at securing Ssense’s long-term future,” Chief Executive Officer Rami Atallah said in a statement. “Our priority remains protecting our employees, customers and partners, and we are committed to rebuilding their trust.” 

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The Montreal-based business, founded by the Atallah family in 2003, turned a minimalist website into a destination for luxury goods, selling brands such as Burberry and Versace. Court filings highlight how Ssense, which was valued at C$5 billion ($3.6 billion) in 2021 when Sequoia Capital made a minority investment, ended up in a distressed financial situation. 

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As the e-commerce sector saw unprecedented demand during the Covid-19 pandemic, the retailer “made inventory purchase decisions and significant investments” to boost capabilities, the documents said. 

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“However, between the years of 2023 and 2025, consumer spending habits began to change and decline, and Ssense began to face macroeconomic challenges such as high interest rates.”

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Measures such as buying fewer brands with lower gross margins and selling off older inventory weren’t enough to preserve liquidity, the filings said. Suppliers began asking to be paid when goods were delivered, and Ssense’s insufficient cash flow meant it couldn’t secure new inventory, affecting sales, according to the documents.

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Then came US President Donald Trump’s decision to end the de minimis tax exemption for shipments of less than $800. That move, which came into effect in late August, threatened Ssense’s ability to ship to US customers, according to the court filing. About 60% of its sales come from the US. 

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Ssense earned C$1.3 billion in sales last year and had about 1.2 million customers over the past 12 months, according to a report from the company’s court-appointed monitor, Ernst & Young LLP.

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The balance sheet shows the pressure the company was under. As of July 31, Ssense reported liabilities of C$499 million and assets of C$387 million. It owed around C$144 million to a syndicate of banks, including BMO, Royal Bank of Canada, JPMorgan Chase & Co., National Bank of Canada and Bank of Nova Scotia. The Quebec government’s investment arm, Investissement Quebec, lent C$21 million.

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Garin authorized new, immediate financing of C$15 million from BMO and C$25 million from the Atallah family to continue operating. About 1,160 people are employed by the retailer, mainly in Montreal.

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A sale and investment solicitation process is underway, which could result in refinancing, recapitalization, acquisition or liquidation offers. The first bid deadline is Oct. 13.

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Groupe Atallah Inc., Ssense’s parent company, is majority-owned by CEO Atallah and his brothers, Firas and Bassel. 

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