Hudson鈥檚 Bay is proposing to initiate a full liquidation of all of its 96 stores as early as Tuesday, putting some 9,000 jobs on the chopping block, if an Ontario court approves the company鈥檚 plan.
The oldest company in Canada spent Monday at Ontario Superior Court in 海角社区官网to discuss its plan to liquidate its entire business聽鈥斅爄ncluding 80 Bay stores, three Saks Fifth Avenue stores and 13 Saks Off 5th stores, and nearly half a billion dollars worth of inventory聽鈥 if it is unable to secure additional financing. The process could last about 10 to 12 weeks, according to company lawyers.
A decision on Hudson鈥檚 Bay鈥檚 proposal could come as early as 2 p.m. Tuesday when Superior Court Justice Peter J. Osborne expects to hear from the company and other stakeholders about whether they were able to come to an agreement on key issues raised during Monday鈥檚 hearing.
Shoppers say it鈥檚 sad to see what鈥檚 happened to the venerable Canadian department store Hudson鈥檚 Bay. Canada's oldest company is waiting for court approval on a full liquidation, which could begin a few days from now and last for up to 12 weeks, but Hudson鈥檚 Bay is still holding out hope that it will find a lifeline. (March 17, 2025 / The Canadian Press)
鈥淚t has been a lengthy day to put it mildly and it is going to be a longer night as well,鈥 Justice Osborne said at the end of the day.
One point of contention is Hudson鈥檚 Bay鈥檚 request to continue to pause its rent payments to RioCan-Hudson鈥檚 Bay JV, a joint venture it has with RioCan Real Estate Investment Trust. Hudson鈥檚 Bay operates 12 retail stores in premises leased or subleased to it by RioCan-Hudson鈥檚 Bay JV and its subsidiaries.
The court also heard opposition from a group of Hudson鈥檚 Bay employees and retirees, who argued the company should not be liquidated and that the process should be delayed by one week to allow further negotiations with stakeholders, such as landlords, to prevent the company from shutting down.
鈥淲hile the applicants remain hopeful that a restructuring solution may still be identified鈥 to allow for continued operation, stated Hudson鈥檚 Bay in court documents, 鈥渢he only interim financing that the applicants could secure requires an immediate inventory liquidation.鈥
鈥淭he company鈥檚 efforts have failed,鈥 said Hudson鈥檚 Bay counsel Ashley Taylor in court Monday, after trying to secure additional financing from 19 potential lenders over the past week and negotiating with landlords on rent payments. The retailer will 鈥減reserve any chance there is鈥 to restructure and avoid a shutdown, he added.
While Hudson鈥檚 Bay is preparing to close all its stores, it retains the right to remove some stores from the liquidation list if the company can secure a deal and gain permission from its debtor-in-possession lender.
A week ago, the company secured $16 million in debtor-in-possession (DIP) financing 鈥 a form of capital companies can seek for restructuring 鈥 from lender agent ReStore Capital, and now wants to raise that amount to $23 million if it gets court approval.
The court documents also say that customers will be able to use remaining gift cards in stores until April 6 during the proposed liquidation process, but Hudson鈥檚 Bay鈥檚 loyalty program will remain suspended.
The Hudson’s Bay Company (HBC), founded in 1670, was in dire financial straits when it filed March 7 for creditor protection under the Companies鈥 Creditors Arrangement Act in a bid to avoid bankruptcy. As of Jan. 1, the company had about $3 million in cash on hand, $1.13 billion in secured debt, and owed its nearly 1,900 unsecured creditors 鈥 such as brands, governments and landlords 鈥 about $520 million.
Hudson鈥檚 Bay cited 鈥渟ignificant鈥 challenges including trade-war tensions with the U.S., post-pandemic drops in downtown store traffic and other economic headwinds.
Most of the 9,000 workers employed by Hudson鈥檚 Bay and its banner retailers could face layoffs if the company goes into the liquidation phase. The company plans to retain 121 key employees during the final period before shutting down and expects to pay them a cumulative $2.7 million, the court document shows.
Joseph Pasquariello, a lawyer for the RioCan-Hudson鈥檚 Bay joint venture, challenged the motion that will let the retailer keep suspending its rent payments to the 12 retail stores his client owns, arguing that 鈥渙ccupation rent鈥 for the joint venture’s properties exceeds that of all other stores combined and should be paid as soon as possible.
鈥淧eople need to be paid for their services being provided,鈥 Pasquariello told the court, adding that significant cash flow to support rent payments could come in if the liquidation proceeds.
He also criticized ReStore Capital for pushing the motion to prioritize its debt over others.
鈥淭hey don鈥檛 have an interest in this company being continued 鈥 That鈥檚 why they鈥檙e enforcing and asking the company to liquidate all the stores today,鈥 Pasquariello said.
Justice Osborne was quick to point out that ReStore Capital was 鈥渢he only lender who stepped up with anything.鈥
Andrew Hatnay, a lawyer representing some Hudson鈥檚 Bay employees and retirees, told the court Monday that employees do not want the company to be liquidated.
鈥淲e have been struggling with these employees and retirees who contacted us over the past week who are dismayed that the employer is moving so rapidly,鈥 said Hatnay, adding that the liquidation could result in one of the biggest mass terminations in Canada since that of Sears Canada in 2017.
鈥淥ur position is that liquidation should not occur,鈥 said Hatnay.
For restructuring industry observer Dina Kovacevic, editor of the Insolvency Insider newsletter, the move by Hudson鈥檚 Bay to seek creditor protection was not entirely surprising.
鈥淲e at Insolvency Insider have been tracking insolvencies for the last several years and in the post-COVID period, retail companies have been struggling from decreased foot traffic, there has been increasing interest rates, supply chain issues in the wake of COVID, etc.,鈥 she told the Star, noting that consumer shopping habits have changed in recent years.
鈥淔or bigger companies like HBC especially who have really expensive leases being anchor tenants in malls, it鈥檚 very difficult to pay creditors, including landlords and suppliers, when they鈥檙e not making as much as they used to.鈥
She pointed to other retail companies that have experienced restructurings in recent years, such as The Body Shop, Cleo, , and Mastermind Toys.
The retail stores will remain open and operational until the final closing date, along with e-commerce sales, if the court approves the liquidation.
The Canadian retail icon is still holding onto a sliver of hope that part of its intellectual property and some stores could survive through a sales process, as it continues to seek last-minute buyers or investors.
鈥淪uch offers will have to provide for repayment in full in cash of the amounts reasonably anticipated to be outstanding under the senior indebtedness鈥 after the liquidation, said Hudson鈥檚 Bay鈥檚 chief financial officer Jennifer Bewley in the court documents. As of March 7, the senior debt was about $254 million.
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