Canada is about to see the largest wave of job losses since the closure of Sears Canada, with its oldest company, Hudson鈥檚 Bay, set to close all its stores this Sunday, marking the end of an era.
The 355-year-old company said in a court document filed Monday evening that it will have terminated about 8,347 employees 鈥 approximately 89 per cent of its current workforce 鈥 by June 1, when it completes the liquidation of more than 80 stores across the country. Another 899 employees are set to lose their jobs around June 15, with some 120 staying on to assist with the final wind-down of the retail giant.
The last time Canada saw layoffs on this scale was in 2018, when Sears Canada shut down more than 100 stores nationwide, putting 12,000 people out of work 鈥 many of whom also faced deficits in their pension plans.
The Canadian retail icon, saddled with more than $1 billion in debt, filed for creditor protection under the Companies鈥 Creditors Arrangement Act (CCAA) in early March. While the company made last-minute efforts to find a buyer or investor to save its business, it has concluded that no part of its operations can be salvaged, according to a court document filed Monday.
“It was necessary for the Company to make the difficult decision to significantly reduce employee headcounts to align with the winddown of the liquidation sale and rolling closure of store locations and required employee positions,” the court document read.听
Hudson鈥檚 Bay has told employees they will not receive severance pay at the time of termination and has ended several benefits since the liquidation began, including pension payments to some former senior executives and post-retirement health and dental benefits for 2,000 retirees.
The beleaguered retailer also plans to terminate听long-term disability benefits for about 183 individuals 鈥 93 of whom are current employees 鈥 on June 15, according to court documents.
“We feel very sad, very aligned with the employees and very much attuned to their concerns,” said Susan Ursel, whose law firm听Ursel Phillips Fellows Hopkinson, was appointed to represent Hudson Bay’s employees and retirees. The firm听 to update the workers.
“We’re working very hard to find every means of alleviating their loss of employment.”
The only piece of reassuring news for Hudson鈥檚 Bay employees is that the retailer will apply to the court next Tuesday to declare that it meets the criteria for the federal Wage Earner Protection Program (WEPP), which would trigger employees鈥 entitlements to benefits under the program.
WEPP provides a one-time payment of up to seven weeks of insurable earnings, up to a maximum of $8,844 to employees whose former employer has filed for bankruptcy or protection under the CCAA, said Ursel.听
“For some HBC employees and former employees, WEPP may fully compensate them for the termination and severance pay they would have otherwise been entitled to receive from HBC,” she wrote.听
Ursel added that her law firm is “negotiating very hard” with Hudson’s Bay about a hardship program that will provide monetary assistance to current and former workers who are in financial distress.
She also wants to assure the employees that the defined benefit pension plans and the defined contribution pension plans are “sufficiently and adequately funded” to provide the benefits.听
Hudson鈥檚 Bay will also seek court approval next Tuesday for the sale of its intellectual property 鈥 including its logo, name, and iconic multicoloured stripes motif 鈥 to Canadian Tire in a $30 million transaction.
Hudson鈥檚 Bay said its board of directors, after careful consideration and consultation, determined that the bid submitted by Canadian Tire was 鈥渢he most favourable鈥 among the 13 offers it received for its intellectual property.
The Star first reported last Friday that the department store chain had signed a deal with Weihong Liu, a B.C. shopping mall owner, to reassign 28 store leases in Ontario, Alberta, and British Columbia.听The reassignment of leases is conditional on consent from the landlords or approval by the court.
Ursel said employees, along with nearly 1,900 other unsecured creditors, will find out if there’s money left over听after Hudson’s Bay sells off as many of its assets as possible and makes priority payments to secured creditors听鈥 Bank of America, Pathlight Capital, Restore Capital and Cadillac Fairview.听
While the federal government has streamlined WEPP and made changes to CCAA to prioritize pension contributions, Ursel said it has not taken steps to prioritize employee termination and severance pay.
“It’s a long-standing feature that employees have been treated at the bottom of the list of creditors,” she said.
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