Mastermind Toys Seeks Creditor Protection
Mastermind Toys, a prominent Canadian retailer with 66 stores nationwide, has initiated the process of creditor protection, citing insurmountable challenges. The company secured an initial order under the Companies’ Creditors Arrangement Act (CCAA) from the Ontario Superior Court of Justice in Toronto. While all stores remain operational with ongoing sales and holiday promotions, the company acknowledged that despite operational improvements, cost reductions, and an extensive strategic review, the obstacles confronting its business are too formidable.
“The difficult but necessary decision to seek creditor protection under the CCAA was made following careful evaluation of available alternatives and in consultation with legal and financial advisors,” it said.
“Over the past several years, Mastermind Toys has faced a range of challenges including increasing competition, disruptions from the COVID-19 pandemic, and more recently a deteriorating macro-economic environment,” the company said in a news release.
In the course of the CCAA proceedings, Mastermind Toys plans to request court authorization for the commencement of a store closure process for a specified group of locations. Simultaneously, it will explore strategic alternatives for the remaining stores. The exact number of locations involved in the closure process was not disclosed. The company anticipates seeking additional relief from the court at a hearing scheduled for November 30.
Founded in 1984 by brothers Andy and Jon Levy, Mastermind Toys initially operated from a 300-square foot shop in Toronto, specializing in educational software for families with newly acquired home computers. Over the years, the company expanded under their leadership, and Birch Hill Private Equity Partners joined in the 2010s to enhance its Canadian presence. The Levy brothers retired in the late 2010s, with Sarah Jordan assuming the role of CEO in 2020.
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