The Chinese parent companies for retailer Miniso Canada have brought an application to initiate bankruptcy of their Canadian division, claiming that the Canadian division has been fraudulent in its business dealings by transferring and hiding assets, the retail news website Retail Insider Media Ltd. first reported on the morning of December 17 Vancouver time.
The parent companies – Miniso International Hong Kong Ltd. and Miniso International (Guangzhou) Co. Ltd. – claim in a December 12 court document obtained by Business in Vancouver that they are owed more than $20 million in debt, and they have retained law firm Fasken Martineau DuMoulin LLP to proceed with the application for bankruptcy. A hearing in B.C. Supreme Court is set for January 7, according to a court document.
Miniso then, at 7:30 p.m. Vancouver time on December 17, tweeted out a statement saying that different news reports about the December 12 bankruptcy application were inaccurate, and that a "preliminary agreement" was reached between the parties on December 13 "to settle their business issues." Miniso Canada said that it and its parent companies are "in the process of finalizing the details."
It added that it will continue to provide quality products and services to Canadian consumers.
“I feel bad, as I really like Miniso as a store,” said Craig Patterson, who owns Retail Insider, in an interview with BIV.
“I just figured that the industry needed to know this ASAP.”
Patterson said some people have speculated to him that the parent companies may be pulling the plug on their Canadian operations in part because of the recent arrest of Chinese telecom executive Meng Wenzhou.
Canadian authorities arrested Wenzhou at the behest of the U.S. government, which alleges that she misled banks into providing financing that enabled corporate dealings that broke U.S. sanctions against Iran.
BIV called the 550 Granville Street location of Miniso and the woman who answered the phone confirmed that her store was open and said that she was unaware of any plan to end operations at the store.
“Even store managers or the managers for each province probably didn’t know this before now,” Patterson said.
If stores do close, it will be an abrupt strategic U-turn for a company that had ambitious growth plans.
BIV spoke with Miniso’s vice-president of development, Yi Ma, in August 2017, when he said that he expected Metro Vancouver to have 15 Miniso stores by August 2018. The company lists 14 stores in B.C. on its website. The company has 48 stores across Canada.
Miniso’s first Canadian store was at 1256 West Broadway. It then opened in the Tsawwassen Mills Outlet Mall, and at 550 Granville Street.
The company’s plan was for at least the first dozen or so stores in B.C. to be either corporately owned or owned by a joint venture with a silent partner, Ma told BIV in 2017.
Miniso’s long-term plan was to sell stores to Canadian franchisees, but Ma said the size of one-time fees, royalty payments and other future franchising details were yet to be determined.