Danier Leather is insolvent -- but not bankrupt yet

A shopper is seen inside a Danier Leather store in downtown Vancouver, B.C., on Thursday February 4, 2016. Danier Leather Inc. said it has entered insolvency proceedings in order to protect itself from creditor lawsuits as it seeks a buyer. The well-known retailer of leatherwear and accessories said the move was necessary because of ongoing financial problems, including more than $27 million in financial losses over the last two years despite its best efforts to cut costs and turn the business around. THE CANADIAN PRESS/Darryl Dyck

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TORONTO -- Danier Leather Inc. said it has entered insolvency proceedings in order to protect itself from creditor lawsuits as it seeks a buyer.

The well-known retailer of leatherwear and accessories said the move was necessary because of ongoing financial problems, including more than $27 million in financial losses over the last two years despite its best efforts to cut costs and turn the business around.

The company lost nearly $20 million in its 2015 fiscal year as sales fell 14 per cent after contracting by 10 per cent the previous year.

Danier said it expects to lose even more money in 2016 as operating losses have continued.

CEO Jeffrey Wortsman said in Danier's most recent annual report that the company had failed to offer clothing and accessories that aligned with current fashion trends.

Danier has signed an agreement with GA Retail Canada to take over its stores and sell off its inventory and retail furniture if it does not find another buyer.

The company said it's not bankrupt and that it has enough cash to keep its stores open and pay its staff as it seeks to avoid liquidation.

After filing for insolvency, Danier becomes protected from further court proceedings against it from its creditors.