Steve's Music: five stores down to one, and a proposal still to write

Steve's Music Store Inc. is one of Canada's oldest family-owned music stores, selling musical instruments and related accessories since 1965.

When it filed a notice of intention on February 4, 2026, it operated five retail stores — downtown Montréal, Greenfield Park, Dollard des Ormeaux, Toronto and Ottawa — plus a separate head office and warehouse, and employed over 80 people, per Fourth Report of the Trustee, May 26, 2026, paras. 1, 10.

Four of those stores are now closed.

Why

The trustee's account of the cause is three sentences, and it will be familiar to anyone who sells physical goods from a physical room:

Over the past few years, the retail environment has been very challenging for Steve's. Customers have shifted from in store to online purchasing of both new and used products. In addition, there have been significant increases in product and operational costs.

Substantial online competition, changed consumer behaviour and higher costs produced significant losses in the past year, and by February the company no longer had sufficient resources to pay operating expenses as they came due, per Fourth Report, May 26, 2026, paras. 11–12.

The detail worth pausing on is "both new and used". A musical instrument retailer's defence against online competition has always been the second-hand trade: the guitar you want to hold before buying, the trade-in, the consignment wall. Once that moves online too, the reason to walk into the store narrows to service and to the instruments too expensive to buy unseen.

The liquidation was a tool, not the end

On February 10, 2026, six days after filing, the court authorised a package: a key employee retention plan, an interim financing facility, and a liquidation services agreement with CICI Détail Inc./CICI Retail Inc., together with a KERP charge, an administration charge, an interim financing charge and a liquidator's charge, per Fourth Report, May 26, 2026, para. 2.

That is a liquidator engaged inside a proposal proceeding — not to wind the company up, but to run the closing sales at the stores that were not going to survive.

The trustee's activity list reflects the dual character of the file: it has monitored receipts and disbursements, supervised the liquidation process, responded to creditor and landlord inquiries, and helped update the cash flow projections, per Fourth Report, May 26, 2026, para. 14.

Landlord inquiries are their own category in a five-store closure. Each closed location is a disclaimed or negotiated lease and a claim, and each one is a party watching the proceeding for a different reason than the trade creditors.

Since mid-April, the company's work has been described in three lines: continue to normalize operations with only one retail location following the closure of the other four; work with the trustee and its counsel on developing a proposal to creditors; and manage the business in the ordinary course, per Fourth Report, May 26, 2026, para. 13.

What a liquidation does to the store that survives

The most instructive number in the report is a negative one, and the reason for it is not obvious.

Over the six weeks from April 6 to May 17, actual receipts were $485,820 against a forecast of $599,437 — net sales 19% below forecast, which the trustee attributes primarily to delays in obtaining new inventory and general unfavourable market trends, per Fourth Report, May 26, 2026, Appendix A, note 1.

Total disbursements came in $150,734 under forecast, producing a positive cash variance of roughly $37,000 — but the composition matters. Inventory purchases were 42% below forecast on "more intentional inventory purchases and lower than projected sales". Salaries were 9% under, "primarily due to layoffs and workforce adjustments implemented in response to current sales levels", per Fourth Report, May 26, 2026, Appendix A, notes 2 and 5.