Laura’s Shoppe Inc. is planning to close 20 stores over the next three weeks following a failed attempt to become more competitive in the face of an influx of American retailers, according to court documents.

More may close as the family-owned apparel retailer reviews its portfolio of 162 Canadian stores and restructures under creditor protection.

The chain employs 2,383 people working for Laura, Laura Petites, Laura Plus and Melanie Lyne.

About half the stores are located in Ontario.

“In 2011, faced with an influx into Canada of large international retailers, (Laura’s Shoppe Inc.) set out to make some significant changes,” according to court documents filed in Montreal.

“Unfortunately, the changes resulted in merchandise that did not resonate with . . . customers.”

Laura suffered undisclosed losses between 2011 and 2013, although it got back on track and generated positive cash flow in 2014.

To offset its losses, Laura president Kalman Fisher, a grandson of the founder, made personal loans to the company, which included $11 million as part of a financing agreement with U.S. based Salus Capital Partners Inc.

Then Salus got into trouble, losing $250 million it loaned to bankrupt electronics retailer RadioShack Corp.

Salus is now being wound down and it wanted to get its money back from Laura.

It wanted to liquidate all of Laura’s inventory — the remainder of the spring and summer merchandise — and close the stores down, which would have put Laura entirely out of business.

Landlord Cadillac Fairview stepped in to help, providing a $10 million loan to Laura, at 12 per cent interest, to help them meet payroll and continue operating.

That move was in Cadillac Fairview’s interest — Laura pays the company annual rents of $20 million.

“They’re probably one of the largest, if not the largest, independent private retailers in Canada, so it would have been a shame if they would have gone out of business if there was a chance of saving them. I think that Cadillac Fairview is certainly helping out the company in a time of dire need,” said Avram Fishman, of Fishman Flanz Meland Paquin LLP, counsel for KPMG, the court-appointed monitor in the case.

In 2011, the same year Laura began a makeover to attract more customers, U.S. discount retailer Target shook up the marketplace by announcing that it had purchased Zellers leases and would open its first stores in Canada in 2013.

It went out of business in Canada less than two years later.

Numerous other U.S. retailers have also expanded in the Canadian marketplace in recent years, including J. Crew, Ann Taylor and Loft, which cater to roughly the same demographic as Laura stores.

In addition to closing 20 stores, Laura is seeking rent reductions on 26 other Cadillac Fairview locations.

The stores will close by Sept. 13. It wasn’t immediately clear which of the locations will close or how many employees will lose their jobs.

According to the court documents, substantial temporary layoffs were effected the week of Aug. 10 at head office. A number will be made permanent during the restructuring.

The company is also terminating leases at its office and warehouse in Laval, Que., and office in Mississauga, Ont.

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The Montreal-based company, founded in 1930, had almost $124 million in liabilities and only $72.5 million of assets as of July 4.

Laura is one of the few Canadian retailers that purchases from Canadian vendors that produce domestically. As such, Laura’s failure could result in a cascade of closures, restructurings and job losses in the manufacturing sector in Canada, according to court documents.

Among the creditors is Frank Lyman Design, a prominent Montreal fashion wholesaler and retailer, specializing in dresses manufactured in Canada. According to a list of creditors, Frank Lyman Design is owed more than $400,000.

“I have always been profitable and I intend to continue on this path,” wrote Frank Lyman, president, in a response to questions from the Star.

“We, in the fashion industry are all hard-working and very talented people, be it manufacturers, retailers (or) suppliers. I am convinced that this year’s setbacks in our industry will not dampen our enthusiasm. It will just make us all sharper.”

Laura’s Shoppe filed for creditor protection on July 31.

Laura by the numbers

With files from The Canadian Press

Laura Shoppes (Laura, Laura Petites, Laura Plus, Melanie Lyne)

Number of stores in Ontario: 80

Number of stores in Canada: 162

Number of employees in Ontario: 1,079

Number of employees in Canada: 2,330