Sheertex's Lifeline: Innovator Sells Assets Under Insolvency Protection

MONTRÉAL, QC – February 17, 2026 – SRTX Inc., the Canadian materials science company that gained international acclaim for its revolutionary Sheertex® Rip-Resist hosiery, is being sold for parts after a prolonged battle with financial instability. The company announced today it has entered a definitive agreement to sell its core assets to A.Y.K International Inc., a fellow Canadian hosiery manufacturer.

To facilitate the sale, SRTX has filed a Notice of Intention to Make a Proposal (NOI) under Canada's Bankruptcy and Insolvency Act (BIA), a move that signals severe financial distress. The filing provides the company with a temporary shield from creditors while it seeks court approval for the transaction in what it calls an "orderly process." PricewaterhouseCoopers Inc. has been appointed as the Licensed Insolvency Trustee to oversee the proceedings.

The deal marks a dramatic turning point for a brand that once promised to upend the disposable nature of the fashion industry with its impossibly strong tights. While the acquisition by A.Y.K. offers a potential future for the Sheertex brand, it comes at a steep cost, raising critical questions about the company's workforce, its operational future, and its founding mission.

A Lifeline for a Troubled Innovator

The transaction is the culmination of a strategic review process that SRTX initiated in October 2025 to find a path toward financial solvency. According to the company, the sale to A.Y.K. was the result of a competitive process designed to secure the best possible outcome for its stakeholders.

A.Y.K International, the company behind established hosiery brands Secret and Silks, plans to integrate the Sheertex brand and its proprietary technology. The purchaser has expressed a commitment to the brand's future, suggesting this is a strategic play to acquire valuable innovation within the hosiery market.

"We have long admired Sheertex -- not only for its innovation, but for its deep commitment to its craft and its customers," said Dan Abitan, Chief Executive Officer of A.Y.K International Inc., in a statement. "We are pleased to welcome Sheertex into the A.Y.K. family, where the brand's expertise and advanced technology will become part of our organization as we invest in its long-term stability and growth."

Filing an NOI provides SRTX with a crucial 30-day stay of proceedings, which can be extended by the court. This "breathing room" prevents creditors from taking legal action to collect debts, allowing the company to finalize the sale to A.Y.K. without the immediate threat of being forced into bankruptcy. The court is expected to review the proposed transaction in the coming weeks.

The Unraveling of a Disruptor

Despite its celebrated product and status as a Certified B Corporation, SRTX has been navigating financial turmoil for over a year. The company's struggles became public in March 2025, when it was reported to be on the verge of insolvency. A last-minute US$40 million funding deal was secured, but it came at the cost of founder Katherine Homuth stepping down as CEO.

Financial disclosures made by Homuth around that time revealed a challenging business model. While the company boasted a positive gross profit, its expenses were crippling. In 2024, SRTX posted a net loss of US$32 million, driven in large part by a staggering US$12.3 million advertising budget. While plans were in place to slash ad spending, the financial damage had already been done.

The company's distress was further evidenced by significant workforce reductions. In October 2025, as part of its strategic review, SRTX laid off nearly 100 employees, effectively halving its staff of almost 200. This followed an earlier round of temporary layoffs attributed to tariff disputes. These events painted a grim picture of a company burning through cash faster than it could innovate its way to profitability.

The Human and Operational Cost

The acquisition by A.Y.K. will not reverse the deep cuts to SRTX's workforce. The press release noted that the purchaser intends to retain a "limited number of employees." Further reports clarify that figure to be less than 10 individuals, a skeleton crew tasked with supporting the transition. For the vast majority of the company's former employees, the sale offers no reprieve.

Under the BIA proceedings, laid-off employees are considered preferred creditors for unpaid wages up to $2,000. They may also be eligible for additional funds through the federal Wage Earner Protection Program (WEPP). However, claims for termination and severance pay are treated as unsecured debt, meaning former staff are unlikely to see significant compensation on that front.

Further complicating the transition is the structure of the deal itself. Key assets, including SRTX's lease for its manufacturing and office facility in Pointe-Claire and certain machinery, are explicitly excluded from the sale. These assets will be dealt with separately during the insolvency proceedings, likely through liquidation or lease termination, which the BIA facilitates. This strongly suggests that A.Y.K. does not intend to operate out of SRTX's headquarters and will instead absorb the Sheertex brand into its own operational footprint, signaling the end of SRTX's physical presence as an independent manufacturer.

A New Chapter for Sheertex, A Question for its Mission

For consumers, the core question is what becomes of the product and the principles it represented. A.Y.K. has publicly committed to the "continued commercialization of SRTX's proprietary materials technology," indicating the Rip-Resist knit that made Sheertex famous will live on. The integration into a larger, more traditional hosiery company could provide the stability and scale that SRTX failed to achieve on its own.

However, the acquisition casts serious doubt on the future of SRTX's identity as a mission-driven B Corporation. The B Corp certification requires companies to meet rigorous standards of social and environmental performance, accountability, and transparency. This status is not automatically transferred in an acquisition. With A.Y.K. International not being a B Corp itself and making no public commitment to pursue the certification, it is highly probable that this hallmark of the Sheertex brand's ethical positioning will be lost.

The sale represents a bittersweet outcome for one of Canada's most-watched startups. While A.Y.K.'s intervention prevents the Sheertex technology from disappearing entirely, the company's journey from celebrated disruptor to a distressed asset sold under insolvency protection serves as a cautionary tale. The brand may have been saved from extinction, but whether its revolutionary spirit and mission can survive under new ownership remains an open question.