Cotton Ginny sells remaining stores

Just under a month after it filed for bankruptcy protection from creditors, Cotton Ginny said Thursday it has an agreement in principle to sell its retail assets to Toronto-based Continental Saxon Group.

No financials details of the deal were released.

Under the terms of the agreement, Continental will assume ownership of Cotton Ginny's remaining retail locations, plus its warehousing and head office facilities in Toronto. Continental Saxon could also keep on the current employees at Cotton Ginny stores and headquarters.

Cotton Ginny filed for bankruptcy protection in mid-January saying it would have to close stores to avert a cash crunch made worse by a dismal December season.

On January 24, the company said it planned to close 95 under-performing stores as part of a restructuring plan designed to reduce operating costs and generate capital. The company said it was also laying off 800 stores workers and 27 head office staff of its total staff of 2,800.

The closures would leave Cotton Ginny with 110 stores.

The sale of the remaining stores to Continental Saxon is subject to the final approval of the Ontario Supreme Court of Justice.

"Obviously we are delighted that the Cotton Ginny brand will live on in Canada, and we are deeply relieved that we have found a way to preserve the jobs of so many of our employees across the country," Larry Gatien, the acting president and chief executive officer of Cotton Ginny Ltd., said.

"Cotton Ginny has built up a tremendous amount of brand loyalty since its founding more than 20 years ago, and we believe there continues to be tremendous goodwill associated with the brand, and strong demand for its products," Al Pace, Continental Saxon's president and chief executive officer, said.

Cotton Ginny will continue to operate its Tabi International stores as a separate division.