Priape, Canada’s leading gay store and sex shop, has closed its stores.

Denis Leblanc, general manager at Priape Inc, confirmed that Priape’s four stores across Canada — Montreal, Toronto, Calgary and Vancouver — closed their doors Oct 21 at 8am Eastern Standard Time.

The company has been under bankruptcy protection since June 27. Leblanc says the closings affect 58 employees.

A fixture of gay villages, Priape says it has been struggling since Health Canada demanded retailers take poppers off the shelves.

In June, just before the Pride season, Health Canada issued a warning asking retailers to stop selling and distributing alkyl nitrites or, as they are more commonly known on the party scene, the popular drug “poppers.”

“For us that represented a huge amount of sales and profit, so that’s what triggered it all,” Leblanc says. “It’s not so much percentage of sales, but the gross profit it brought in, and proportionately it was very significant.”

Although poppers are not considered a narcotic in Canada, and possession of alkyl nitrates is not illegal, they are considered a drug, and their sale is regulated by the Food and Drug Act. Unauthorized sales of the drug can be punished with jail terms of up to three years and fines of up to $5,000.

On Oct 21, Leblanc said he will provide more information “tomorrow or before the end of the week.” He says he’s hopeful that the company can still be saved.

He says there is still a chance that the stores, or some of the stores, could remain open. “That possibility exists. I can’t say anymore about this right now.”

But it appears Priape’s financial woes and debt started long before the June ban on popper sales.

On June 27, Priape sent a “Notice of Intention To Make a Proposal” to its list of creditors owed more than $250.

Traditionally, companies make such a proposal to avoid filing for bankruptcy, hoping creditors will work out a pennies-on-the-dollar settlement for debts owed. The action sometimes provides a company with the opportunity and time to restructure.

As of the June 27 filing, Priape owed 106 companies $687,650.30 — debts that would have accrued long before Health Canada’s announcement in June cracking down on popper sales.

Among creditors listed on the June statement are many familiar brand names in gay retail: Mr S Leather, in San Francisco, owed $28,709; Nasty Pig clothing company, owed $11,985; silicone toy manufacturer Ox Balls, owed $35,347; G-Star jeans, owed $13,504; and Timoteo underwear, owed $13,588.

Pink Triangle Press, publisher of Xtra and dailyxtra.com, was owed $4,200.

Debt to two large financial institutions added up to just over $143,000. Priape owed $67,641 to American Express and $75,634 to Visa Desjardins.

We do not know how that debt standing may have changed since the June filing; however, on Sept 9, the company applied to Quebec’s Superior Court Commercial Division for a “Notice to Creditors for an Extension of Time.” Priape was granted a 45-day extension, making the new settlement deadline Oct 24.

Priape closed the stores three days before the Oct 24 deadline.

Priape Montreal was the first to open, in 1974. The company has since expanded to Toronto, in 1998, Calgary, in 2004, and Vancouver, in 2005, selling DVDs, books, clothing, leather, sex toys and other products that appeal to gay consumers.

In June, the founder of Priape, Bernard Rousseau, was owed $4,167. Rousseau sold the chain to the current owners about 10 years ago.

Xtra is following the story.