Insolvent Montréal startup SRTX recently struck a deal to sell some of its assets to fellow Québec textile manufacturing firm AYK International. Court filings published online last week by SRTX trustee PricewaterhouseCoopers (PwC) share more details about the state of the Sheertex maker’s business and how it got here.
“The technology works. The customers are committed. The vision is clear. But our ability to secure the working capital needed to fund 2025 production will determine whether we seize this opportunity.”
Katherine Homuth
While US tariffs and cross-border duty changes contributed to SRTX’s liquidity crisis in 2025, the apparel innovator’s revenue had been declining since 2023 as it reoriented its business but struggled to scale its production and achieve profitability, according to its application to the Superior Court of Québec in Montréal for approval of the AYK transaction.
PwC’s first report found that SRTX’s total revenue—which increased from $35.8 million USD in 2022 to $45.5 million USD in 2023—dropped to $27.9 million USD in 2024 as the company shifted its focus from direct-to-consumer (D2C) to business-to-business (B2B) sales.
This was a strategic pivot that SRTX founder and former CEO Katherine Homuth acknowledged in December 2024 when she began posting publicly about SRTX’s cash crunch, and her hopes of scaling up the company’s production enough to become profitable by the end of 2025.
“SRTX is at a transformational moment,” Homuth argued in a blog post. “The technology works. The customers are committed. The vision is clear. But our ability to secure the working capital needed to fund 2025 production will determine whether we seize this opportunity.”
Court documents indicate SRTX couldn’t achieve that target before entering insolvency proceedings. PwC’s first report found that from Jan. 1 to Oct. 31, 2025, SRTX posted $7.6 million USD in revenue and a $30.1-million USD net loss, for total losses since 2023 of more than $128 million USD.
An ambitious goal
SRTX makes and sells hosiery and swimwear. Founded in 2017, the startup is best known for its “unbreakable,” rip-resistant Sheertex tights, which consist of a uniquely durable polymer several times stronger than steel wire and represent the core driver of its business. The Certified B Corporation has also developed water-repellent Watertex swimwear and software for managing textile manufacturing, called Cortex.
SRTX’s vision was to own the tights market and develop a new “operating system” for manufacturing apparel at its Montréal facility. It was an ambitious, difficult, and capital-intensive goal—and a challenge that Homuth has spoken frankly about. The PwC report indicates SRTX (once valued at $350 million USD) raised approximately $255 million USD in total debt and equity funding to build its own infrastructure and develop and produce its products.
The startup’s backers have included H&M, BDC, Investissement Québec, RBC, ArcTern Ventures, and Export Development Canada (EDC), which was primarily financing SRTX’s operations.
“Sheertex is not profitable—not even close. We lose over $30 million a year making and shipping tights,” Homuth wrote in December 2025, noting that the startup had spent $50 million building its own manufacturing infrastructure while selling its products below cost to prove demand. “The demand was needed to justify the infrastructure, and the infrastructure was needed to make the unit economics work. It’s a maddening chicken-and-egg loop, but one that has been necessary to get this off the ground.”
SRTX’s court application says the high cost of manufacturing its Sheertex tights was “the principal impediment to its profitability.” Executing on its plans amid Montréal’s once-thriving, long-declining garment industry, a downturn, and a trade war was also no small task.
In December 2024, SRTX closed $25 million USD in debt. The following February, SRTX temporarily—later permanently—laid off 40 percent of its 350 staff in anticipation of proposed US tariffs and the abolishment of the de minimis exemption. At the time, Homuth attributed this workforce reduction to these impending tariffs and fundraising delays.
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“Unfavourable factors such as high production costs, scalability delays, the cyclical nature of the hosiery sector, as well as fluctuations in exchange rates and shifting trade policies,” and challenges closing a new funding round contributed to SRTX’s cash flow issues, the court application states.
In the last 12 months covered by PwC’s report, the US accounted for 70 percent of SRTX’s D2C sales and 25 percent of its B2B sales. Though tariffs did not come into effect until later, their promise put a damper on investors’ willingness to back businesses exposed to them, and as court filings and Homuth’s posts indicate, SRTX had already been facing a cash crunch.
Continuing the Sheertex brand
In March 2025, Homuth left SRTX as part of a $40-million USD fundraise that recapitalized the company. She later submitted a bid to return to SRTX in October when her short-lived replacement as CEO, BonLook co-founder Sophie Boulanger, departed. At that time, SRTX laid off half of its remaining 200 staff, reduced production, and initiated a strategic review in search of potential buyers or investors amid continued liquidity challenges.
As of that time, SRTX had only $4.5 million USD in cash, $129.4 million USD in total assets, and $166.4 million USD worth of liabilities. PwC said it contacted 138 potential buyers and received four offers as part of its strategic review before choosing AYK. In a statement shared with BetaKit on Monday, SRTX said that the AYK takeover was the outcome of a review intended to find the best path forward for the company.
RELATED: Founder Katherine Homuth submits bid to rejoin SRTX as company enters strategic review
“Given the complexity of the business, evolving market conditions, and capital requirements, the review was a proactive step to evaluate options that could provide long-term stability and support the continued commercialization of SRTX’s proprietary materials technology,” the company said.
AYK, which owns the Secret and Silks pantyhose brands, is expected to continue the Sheertex brand and keep using SRTX’s proprietary tech, but not retain the lease for its 300,000-square-foot Pointe-Claire, Que., factory, or some of its machinery and equipment. The company plans to offer jobs to seven of SRTX’s 30 current employees.
In preparation for the transaction, for which a hearing is scheduled on Feb. 24, SRTX has filed a Notice of Intention (NOI) to make a proposal under the Bankruptcy and Insolvency Act. SRTX is seeking court approval and a reverse vesting order to cleanse the business of unwanted assets and debt by transferring them to a shell company as part of the deal. SRTX’s remaining assets will be handled under NOI proceedings.
Feature image courtesy H&M Group Ventures.