As Hudson’s Bay continues its restructuring efforts under court protection, a new court document reveals considerable interest in the department store chain’s vast network of retail leases across Canada. The update, released Tuesday as part of the company’s ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings, shows that 18 unnamed parties have submitted letters of intent (LOIs) for 65 of the retailer’s leases, marking a critical step in a broader process to offload the company’s remaining assets before the majority of stores shutter in mid-June.
The Second Report of the Monitor, filed by Alvarez & Marsal Canada Inc. on Tuesday, details the status of a court-approved Lease Monetization Process managed by real estate consultancy Oberfeld Snowcap, providing the clearest picture yet of how the Hudson’s Bay lease portfolio is faring in the marketplace.
A Complex Wind-Down for an Iconic Retailer
Hudson’s Bay, a storied name in Canadian retail with roots dating back to 1670, filed for creditor protection in early March after failing to secure the capital necessary to continue as a going concern. Since then, the company has moved aggressively to liquidate merchandise and reduce operations, planning to close almost all of its 80 Hudson’s Bay stores, 13 Saks Off Fifth locations, and 3 Saks Fifth Avenue stores.
As of mid-April, only six Hudson’s Bay stores in the Toronto and Montreal areas were expected to remain open past June (no word yet on the downtown Toronto Saks), with lease marketing activities focused on the remaining roughly 100 leaseholds, which include high-traffic urban and suburban retail spaces as well as four distribution centres.
65 Leases Attract Bids — But Not All Find Suitors
The Monitor’s report confirms that 31 parties signed non-disclosure agreements (NDAs) to access lease information. Of these, 18 proceeded to submit LOIs covering 65 separate lease locations. According to the report, some of the bids overlap, meaning multiple parties have expressed interest in the same locations, while some offers were made by landlords themselves.
While the Monitor declined to identify the interested parties or specify which properties garnered the most attention, the activity signals robust market interest in at least a portion of Hudson’s Bay’s real estate footprint — particularly in prime locations that are difficult to access under typical market conditions.
Challenges Tied to Lease Terms
Despite this early momentum, the report also highlights considerable challenges. 36 leases did not receive any interest, raising the possibility that those locations may be returned to landlords.
The hurdles stem in part from restrictive lease covenants. Many of Hudson’s Bay’s leases require that any tenant use the full premises and in some cases, specify that the occupant must operate as a department store. These legacy provisions significantly narrow the pool of viable replacements, as only a handful of retailers operate on that scale in Canada today.
Additionally, since Hudson’s Bay sold much of its owned real estate years ago, the leases being offered don’t include title to the buildings. Several stores are operated through joint ventures with RioCan Real Estate Investment Trust, but most locations are subject to long-standing agreements that often include favourable lease rates — another factor making the assets attractive, but also potentially complex to assume.
Lease Process Timeline and Sale Mechanics
According to the court filing, binding offers for leases are due by May 1, 2025, and must include a 10 per cent refundable deposit based on the proposed purchase price. These bids follow a structured two-phase lease monetization process supervised by Oberfeld and the Monitor.
Initial LOIs, due earlier in April, provided non-binding indications of interest. The Phase 1 deadline served as a barometer for interest levels and helped narrow the field of serious contenders.
The next step will involve the assessment of qualified LOIs, with a subset of these potentially advancing to binding agreement negotiations. Lease assignments will ultimately require Court approval, and in many cases, landlord consent.
Interest May Extend Beyond Leases Alone
Interestingly, the Monitor’s report also noted that some prospective bidders for leases are also evaluating other Hudson’s Bay assets as part of the parallel Sale and Investment Solicitation Process (SISP). That includes intellectual property, such as the company’s trademarks and well-known multi-coloured “Stripes” branding, which still holds considerable equity in the Canadian market.
It remains unclear whether any of the lease bidders are also vying for brand assets — or whether a single buyer might seek to relaunch a scaled-down version of Hudson’s Bay using select stores and associated IP.
A Historic Art Collection to Be Sold Separately
In a related development, the Monitor has announced a separate art auction to be held for Hudson’s Bay’s historic collection of 1,700 artworks and 2,700 artifacts, including the company’s original Royal Charter from 1670. These culturally significant assets have attracted interest from museums, government institutions, and private collectors.
A formal auction is being organized under a different sales process, with guidance from a professional auctioneer and oversight from the Monitor and financial advisor Reflect Advisors LLC. Bids for the collection are due April 30, and sales will be completed via individual bills of sale rather than court orders for each transaction.
Cash Flow Position Improving Amid Liquidation
The Second Report also reveals that Hudson’s Bay’s cash position is more stable than anticipated, thanks in part to strong retail performance amid liquidation. For the reporting period ending April 18, the company posted net cash flow of $112.5 million, which was nearly $30 million ahead of forecast. The Monitor attributes the variance to stronger-than-expected store traffic and sales, as well as delays in payments related to liquidation goods.
The cash balance at the time of reporting stood at $122.5 million, significantly ahead of the projected $71.5 million. A new 13-week forecast projects the company will retain positive cash flow through mid-July, albeit modestly, with a closing balance forecasted at $124.6 million.
What’s Next for Hudson’s Bay
While the lease monetization and liquidation processes continue, the company also faces scrutiny over employee entitlements. The Monitor has backed a motion to appoint Ursel Phillips Fellows Hopkinson LLP as Employee Representative Counsel to assist non-unionized employees with claims, severance issues, and communications. The firm will also liaise with the court and the Monitor on behalf of these stakeholders.
Hudson’s Bay could be entering its final chapter as a national department store chain. Yet, the strength of interest in its leases, brand assets, and even its art collection demonstrates the lasting value of its legacy — and suggests that elements of the brand may yet survive in new forms, or under new ownership.
