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.”
Carl Boutet is correct to call into question executives asking to double their liability insurance to $50 million, while key employees will receive only $3 million in compensation. But there is also the question of whether the key employees identified are, in fact, key.
During Sears Canada’s CCAA, a number of head office employees received key person compensation who really had no role in the attempted turnaround, at the outset or throughout. They weren’t directing anything or anyone. They sat around all day, interrupted only by coffee breaks and lunchtime.
They were favourites of the leadership team, that’s all. The judge had no way to verify who was “key” or not, other than trusting the word of executives responsible for tanking the company, and many people received what were in effect “thank you” payouts for always being cozy with the executive team as a result.
Most of the true leaders in the turnaround attempt earned nothing other than their regular compensation, and were rewarded with pink slips at the very end.
I heard that April 7th is the last day for Gift Cards.
The sad part I called this out when HBC bought SFA.
How about a storey of how Hudson Bay’s owner has walked away after stripping it for parts to purchase Neiman Marcus. And now Hudsons Bay is now on its own to crash and burn? I still don’t understand how that is happening.
I’ll be reporting more, and honestly, in the coming days. I’ll be analyzing things more broadly including how Saks Global plays into it. It’s a shame that Hudson’s Bay became orphaned and abandoned after Saks Global became a thing — while HBC assets were monetized to extract value before the bankruptcy filing.
Yes, it’s very interesting how they are now able to wash their hands while the company that made it happen now faces bankruptcy, job loses and end of an era in Canada. While Saks Global now will continue in the states with no impact.
Shame on Richard Baker for actively planning and ultimately executing this outcome… has he no decency?
Well said Christopher. It has been in the planning for months if not years. Richard Baker should be held accountable for this & funds recovered from other companies he bought (Neiman Marcus) at the expense of Hudson’s Bay.
Totally agree with you
As a supplier, we see this as completely premeditated, shame on us on believing the “story” that revolved around the 2B+ purchase of Niemans, it is criminal that no one will be punished within HBC – Richard Baker is a criminal
Can the Government not step in and help…its truly unbelievable that this should be happening
What game are the landlords playing? The Canadian retail property market cannot absorb the massive square footage that would suddenly be released if HBC is liquidated. It took years for the market to absorb and re-lease the premises vacated when Target Canada and Sears Canada failed, and even the former Nordstrom Canada premises are not yet 100% repurposed. I get that some landlords have visions of “unlocking underlying value” of HBC premises, but the fact remains that there is no low-hanging fruit here. Most of the tenants who might be interested in portions of the HBC spaces are likely already present at most malls, having taken space when large Target or Sears premises were chopped up. And there are no big international tenants interested in coming to Canada, not after watching Target Corporation and Nordstrom Inc. have their tails handed to them. Nor is turning former Bay stores into entertainment complexes a realistic possibility, not with cinemas struggling in this country. And forget about converting downtown stores into office complexes: how many corporate tenants are looking additional office space these days?
In a worst case scenario, Simons might be persuaded to take a maximum of half a dozen HBC locations, but that still leaves a whopping 77 premises landlords would struggle to re-lease.
There is no realistic alternative to landlords finding a way to partner with HBC and keep at least a portion of the business going. Stop being difficult, get a deal done.
Saks Global will go bankrupt too in 5-10 years book it.
I was at the West Edmonton Mall on Mar 17th about 11am and was surprised by the number of cars parked outside of the Bay. So I went in – and was disgusted at the number of shoppers there grabbing merchandise-yes grabbing anything in site with a Bay stripe and anything with a sale sign!! I can’t tell you how sad I felt for the employees there. I worked for The Bay as a part-time seasonal employee. The staff are absolutely fabulous.
So sad
CJ
Why is no one talking about the purchase of Neiman Marcus for 2.7 billion and then squirreled away under a separate entity that creditors cannot touch. Sounds like corporate raiding to me. Where’s the outcry? Where’s the government? How is this legal?
It’s was all well played. Why would NM and SFA us all of a sudden not be in trouble and HBC is. They kept saying what good shape the company was in and then they formed sacs global and suddenly its gone bad. Why as well would sacs canada not be part of sacs global. What’s so global about it if its just the us stores.
It is just not right
it certainly isn’t right . It seems these outside firms simply extract all value out of a company like selling real estate and then simply take advantage of Canada’s bankruptcy laws and walk away scott free!
Once again, Canadian retail is decades behind other places. The middle class department store thrives in places like The UK, where there’s John Lewis, M&S and Selfridges which The Bay could model theirselves on. What ‘s stopping them from attracting buyers with a foodhall? Selfies has one and they sell groceries and many John Lewis locations have a waitrose. The prime locations and often multi story layouts of these are ideally suited for it and instead of investing in The Bay, their leaders buy American department stores? The worst idea of the century.
I feel the outcome for these loyal and dedicated employees is so unfair and unjust. I love their store and high quality products.