Shermag 3-month chart

Shermag Inc., the troubled furniture manufacturer, filed for court protection from its creditors Monday to allow it time to finish its restructuring.

Creditor protection, once granted, prevents creditors from seizing assets while the company tries to arrive at an arrangement with creditors and other stakeholders with the help of a court-appointed monitor.

The Sherbrooke, Que.-based company has been struggling with slumping sales as the high Canadian dollar, the weakening U.S. housing market and tough competition from Asia took their toll.

Shermag has closed or consolidated several factories and has slashed its workforce by two-thirds — from 2,400 four years ago to about 800 staff today.

Earlier this year, minority shareholder Clarke Inc. offered to take Shermag private. It warned that its offer would be at a price less than what Shermag shares were trading at.

But two weeks ago, Shermag said Clarke had withdrawn its offer after an independent valuator concluded that Shermag was worth more than Clarke was willing to pay.

Shares of Shermag dropped 23.5 cents to close at 11.5 cents on the TSX.