The fate of Canada’s iconic retailer, Hudson’s Bay, remains uncertain following a pivotal court hearing on Monday, March 17. Lawyers representing the struggling retailer told an Ontario Superior Court judge that unless a buyer or additional financing is secured, liquidation sales could have commence on Tuesday (March 18) across Hudson’s Bay’s 80 department stores, three Saks Fifth Avenue locations, and 13 Saks Off Fifth outlets.
“As it stands right now, the math doesn’t work,” Ashley Taylor, a lawyer for Hudson’s Bay, told the court. “We are actively seeking new capital, but as of today, liquidation remains the most viable course of action.”
At the end of Monday’s hearing, Justice Peter J. Osborne urged the retailer and its landlords to keep negotiating and to de-escalate tensions amongst parties. A ruling on Hudson’s Bay’s proposal could be issued as early as 2 p.m. on Tuesday, when Justice Osborne is set to hear from the company and other stakeholders on whether they reached an agreement on key issues discussed during Monday’s hearing.
Struggles to Secure Financing and Rescue the Business
Hudson’s Bay sought court protection under the Companies’ Creditors Arrangement Act (CCAA) on March 7 after an eleventh-hour financing deal collapsed. The company has since secured $23 million in interim financing from Restore Capital LLC, a private equity firm specializing in distressed businesses. However, this funding only facilitates an orderly liquidation rather than a restructuring plan that would allow Hudson’s Bay to remain operational.
“We are looking anywhere we can for that capital,” Taylor stated. “We need to cast the net as wide as possible, looking for solutions here.”
Justice Osborne, presiding over Monday’s hearing, expressed concerns that selling off assets too quickly could eliminate any chance of saving part of the business. “I want to make sure we haven’t sold the jewels in the crown, as it were, making a better outcome impossible,” Osborne said.
A key issue in the case is Hudson’s Bay’s request to extend the pause on its rent payments to RioCan-Hudson’s Bay JV, a joint venture with RioCan Real Estate Investment Trust. The retailer currently operates 12 stores in properties leased or subleased through the joint venture and its subsidiaries.
Additionally, the court heard objections from a group of Hudson’s Bay employees and retirees, who argued against the company’s liquidation. They urged for a one-week delay in the process to allow further negotiations with stakeholders, including landlords, in an effort to keep the business from shutting down.
Landlords, Lenders, and the Battle Over Debt
Hudson’s Bay had been in talks with landlords to keep roughly 40 stores open. However, those discussions fell apart late last week. The retailer had proposed that landlords temporarily waive rent payments and potentially invest in keeping select locations operational. Without such agreements, full liquidation is the only path forward.
Retail analyst Carl Boutet weighed in on the situation, citing financial documents submitted to the court. “Their monitor anticipates $465 million in revenue from liquidation, which after operating costs would generate around $158 million in net cash flow,” Boutet said. “But with $258 million in senior debt, a significant portion of unsecured debt—including payments owed to suppliers—will not be recovered.”
Boutet also noted disparities in financial priorities, adding, “Directors have requested to double their liability insurance to $50 million, while the key employees responsible for managing this crisis will receive only $3 million in compensation.”
Liquidation to Extend to E-Commerce
Elizabeth Pillon, another lawyer representing Hudson’s Bay, revealed that the company currently has about $315 million in inventory on its balance sheet. The proposed liquidation will extend beyond physical stores, affecting the company’s e-commerce business. The online operations will continue until the company’s Scarborough, Ont., distribution centre is emptied.
The proposed liquidation plan has faced strong opposition from employee representatives. Andrew Hatnay, a lawyer advocating for Hudson’s Bay workers, argued that the retailer’s collapse will lead to one of the largest mass terminations in Canada since Sears Canada folded.
Hatnay urged the court to delay the liquidation by one week, stating, “Once liquidation starts, it becomes a self-fulfilling prophecy. When customers rush in to buy up all the inventory, Hudson’s Bay will be left with so few options to move forward that the business will be finished.”
“Allowing this liquidation to start virtually instantly, seals the fate,” he added.
As Hudson’s Bay prepares for liquidation, it has announced plans to stop accepting gift cards after April 6. The company has already paused its loyalty program, leaving over 8.2 million Canadian customers with approximately $58.5 million in unused—now useless—points. This decision has sparked frustration among customers who relied on the rewards system.
Potential Buyers? Hope Dwindles
Despite ongoing speculation, few viable buyers have emerged for Hudson’s Bay’s assets. “At this point, we’re essentially waiting for a miracle,” said Boutet. “Maybe a group like Thailand’s Central Group, which has had success with Selfridges in the UK, might step in. But realistically, I have a better chance of being struck by lightning.”
JLL was announced to be involved in selling Hudson’s Bay leases to new tenants, though a Hudson’s Bay representative says that may no longer be the case. Landlords themselves may prefer to reclaim properties outright rather than participate in a structured sale process, Boutet said.
If the court grants approval, Hudson’s Bay will seek buyers for its leases and may also sell its operations and intellectual property, including its iconic stripes and point blanket designs. Any potential sale of the company would require repayment of its senior debt, according to an affidavit filed in court on Friday by Hudson’s Bay Co. ULC Chief Financial Officer Jennifer Bewley.
The Looming Liquidation
With liquidation sales expected to commence later this week, many questions remain. If all assets are sold, will Hudson’s Bay exist in any form beyond mid-2025? The answer likely depends on whether a financial saviour emerges in the coming weeks.
“The appetite for this much inventory hitting the Canadian market all at once is questionable,” said Boutet. “We know there’s no goodwill left among creditors and vendors. That won’t change between now and June 15.”
For now, the focus is on whether the court will approve the company’s request to move forward with liquidation sales. An outcome is expected later this week. Meanwhile, questions linger over the role of Hudson’s Bay’s leadership, including the company’s governor, Richard Baker.
“Where is Governor Baker in all of this?” Boutet asked. “He’s been awfully quiet.”
More from Retail Insider:
