After struggling for years to revive its flagging fortunes, Danier Leather Inc. will liquidate its stores if no buyer steps forward with a rescue plan.

The firm announced Thursday it has started insolvency proceedings under the Bankruptcy and Insolvency Act. For now, the stores remain open and all creditor claims are on hold pending the outcome of the proceedings.

The company has suffered big losses over the past two years and sought to refinance in June. In July, Danier hired an investment banking and financial advisory firm to explore strategic alternatives.

Mario Forte, a lawyer with Goldman Sloan Nash and Haber, an expert in insolvency and restructuring, says the fact that Danier has an agreement to liquidate should it not find a buyer, sends a message.

“While they’re looking for something better, if they don’t find anything, they’re in a liquidation,” said Forte. “The prognosis is very poor.”

Danier chief executive officer Jeffrey Wortsman declined to comment.

However, a statement issued Thursday by Danier said that despite efforts to turn things around “the company continues to face declining financial performance and anticipates further operating losses in its current fiscal year.”

“This is a company that has struggled to offer the right product at the right time, in the right amount, and given the warm weather this holiday season, it significantly affected their business,” said Randy Harris, publisher of Canadian Apparel Insights, a monthly industry newsletter.

Ira Smith, of Ira Smith Trustee and Receiver Inc., said the filing could allow Danier to walk away from its leases.

Some retail real estate companies are still struggling to fill the spaces left when Target Canada folded last year.

“I don’t think this would come as a surprise to most professional landlords – the Oxfords, the Cadillacs, the Ivanhoes,” said Don Gregor, executive vice-president, Aurora Realty, referring to the landlords behind Canada’s largest malls.

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“They would have been getting sales reports. They would have had some advance warning that they were in trouble.”

Struggling harder, said Gregor, are the smaller strip malls.

“When you have a million square feet and you lose 5,000 feet, that’s not a big deal, but when you have a smaller mall anchored by a Target or Walmart, that’s a problem, who do you go to now to fill it? There’s a diminishing number of parties available to take that space.”