Stock tanks as Toronto dry cleaner seeks court protection
Toronto-based DoveCorp Enterprises, with dry-cleaning shops under such banners as Dove Cleaners and Cadet Cleaners, is seeking shelter in bankruptcy court two days after concedingthat a union won avote to represent workers at its plant.
DoveCorp'sshares, listed on the TSX Venture Exchange, changed hands for as much as 25 cents in February and 12.5 cents on Wednesday. They lost 80 per cent of their remaining value Thursday morning,sinking to 2.5 cents.
DoveCorpannounced plans on Thursday tofile for protection under the Companies' Creditors Arrangement Act (CCAA), givingno reason for the decision. Sam Mizrahi,its founder and president, did not immediately respond to a call seeking details.
On Tuesday, the companyhad said it expected the United Food & Commercial Workers to be certified as bargaining agent for the plant workers after the Ontario Labour Relations Board determined that a majority voted for the union.
It noted that "issues relating to the dismissal of employees, as set out in the union's unfair labour practice complaint, remain outstanding."
In Thursday's announcement,DoveCorp saidit intendsto stay in businessand develop a restructuringplan if the court filing is approved. It also said it might put itself up for sale.
"The company anticipates that the CCAA process will provide it with the time and legal protection necessary to complete a process that will include a consideration of all restructuring alternatives, including a marketing effort for the sale of its business," it said.
DoveCorp previously dropped few hints that it was in dire straits.
Itslateststatements continue to call it"a leader in Canada’s dry-cleaning and laundry industry," with 98 retaillocations and "the only ISO 9001 dry cleaning registration in the world."
It earlier reported aprofit of $1.8 million for the first three months of 2007, compared with a loss of just under $62,000 a year earlier.
"Our principal strength is our ability to combine expertise in both retail dry cleaning and commercial linen services as one business in one processing plant," it said in an accompanying management report.