The Hudson’s Bay Company’s attempt to salvage part of its struggling retail empire has sparked fierce legal opposition, with major landlords accusing the company’s proposed restructuring support agreement (RSA) of dooming any chance of saving the iconic retailer.
“What you have before you offers no benefit at all to HBC,” said David Bish, a lawyer with Torys LLP representing Cadillac Fairview, during a Thursday hearing in Ontario Superior Court. “It’s a Trojan horse.”
The RSA, struck between Hudson’s Bay and its senior lenders—Bank of America N.A., Pathlight Capital LP, and Restore Capital LLC—would restrict the retailer’s operations while requiring weekly budgets and progress reports. If a credible restructuring plan isn’t presented by April 7, six remaining stores spared from liquidation would be forced to begin clearance sales on April 8.
Six Stores Remain in Limbo
Currently, just six Hudson’s Bay stores—three in the Greater Toronto Area and three in the Montreal region, including one in downtown Toronto housing a Saks Fifth Avenue—have been left out of the liquidation process. These locations were meant to act as a platform for a potential buyer or business plan.
“The only thing left to sell is those six stores,” said Carl Boutet, a Montreal-based retail strategist. “If you pull them into the liquidation, you’re not saving anything.”
Court filings reveal a tight sales timeline: Hudson’s Bay aims to evaluate bids by the end of April. However, the RSA’s April 7 deadline could preclude meaningful negotiations.
Lenders Want Control, Landlords Push Back
Lenders argue they need control to protect their investment, claiming inventory in stores technically belongs to them. They warn that without an RSA, they would seek receivership.
But Boutet emphasized that even if lenders pushed for it, the court could intervene.
“Yes, they can request receivership,” he said. “But the judge can say no. The court has discretion to allow those six stores to continue operating independently.”
Landlords—including Cadillac Fairview, RioCan REIT, Oxford Properties, KingSett Capital, Morguard, and others—argued that the RSA hands too much control to lenders and risks cutting off a possible path forward.
A Battle Over Budgets and Sales Performance
Boutet noted that the lenders are willing to let the six stores remain open until the end of April—but only under strict oversight.
“They want weekly budgets and assurances that the stores are cash-flow positive,” he said. “It’s about control. They don’t want to bleed more money on unprofitable stores.”
That stance reflects the broader concern from first-ranking lenders: with cash dwindling and sales underperforming, the longer the process drags on, the smaller the recovery.
“We’re not even sure these stores are bringing in enough to cover rent and payroll,” Boutet said.
Store Traffic and Conditions Raise Concerns
Since liquidation began on March 18, traffic at most locations has reportedly been underwhelming.
“We’ve seen posts on social media showing quiet stores,” said Boutet. “Some shoppers are complaining about broken escalators and poor air circulation. That doesn’t exactly inspire confidence.”
Boutet described the first weekend of liquidation as a classic “dead cat bounce.”
“People rushed in out of curiosity. But the sales weren’t deep enough to move inventory. Most Bay shoppers wait for 30–40% discounts before buying. Right now, it’s just not compelling.”
Bonus Plan Sparks Controversy
Court documents reveal that while rank-and-file employees face layoffs without severance or disability benefits, a proposed bonus pool of up to $3 million has been set aside for 121 managers and executives.
The breakdown, according to filings, includes:
- Up to $3 million in total (though only $2.7 million is currently allocated)
- $1.1 million for 94 store managers
- $550,000 for 17 non-store staff
- $1,087,750 for 10 senior non-store leadership staff
“The rationale is simple,” said Boutet. “They need someone to keep the lights on during liquidation. But for employees and unions, it’s a slap in the face.”
He added, “You’ve got thousands of frontline staff losing their jobs with no compensation, while executives collect bonuses. It’s not a good look.”
Suppliers Left in the Dark
While landlords and lenders battle in court, another group is quietly suffering: small suppliers.
“There are over 2,000 suppliers,” said Boutet. “Many are small, family-run businesses. Some are owed $50,000 or $150,000. For them, that’s life-changing money.”
Boutet described a friend whose brand was a supplier to HBC and has since written off the debt.
“She’s now focused on salvaging inventory,” he said. “No one’s talking about these small brands. They paid upfront for their merchandise. There’s no insurance, no recovery. It’s devastating.”
Who Controls the Remaining Stores?
The battle over the six remaining stores comes down to control. Landlords believe letting Hudson’s Bay run them freely until April 30 could maximize value. Lenders argue that oversight is needed to ensure financial discipline.
“HBC lawyers think they can sell better than anyone,” said Boutet. “Meanwhile, Hilco—the liquidator—may prefer to take over, because they earn more if they control the process.”
Boutet believes the court may side with landlords and allow the six stores to continue operating outside the RSA—under tight scrutiny.
“The judge might carve out the six stores from the agreement, letting them operate on a short leash,” he said. “The goal is to preserve value without losing control.”
Countdown to Collapse?
As Hudson’s Bay races against multiple deadlines, the question remains whether any part of the business can be saved.
“It’s not even six weeks—it’s more like six days,” said Boutet. “Everything is moving incredibly fast. But even if a buyer steps in, what’s really left?”
Unless consumer traffic spikes or a buyer emerges soon, even the six preserved stores may not survive.
“This could be the final chapter,” said Boutet. “Unless someone shows up with a serious offer—and fast.”
I’m sorry, in what way does the RSA “doom” any chance of saving HBC? As far as I am aware, the agreement to spare six stores is the only realistic proposal for saving ANY aspect of HBC. The other 74 HBC stores are already in liquidation, they’re done as part of the chain once that process ends. From what I can gather, landlords and lenders refused to agree to previous proposals from the company to keep a larger network of stores going. So the six stores option is the only game in town.
It’s sad because the situation recalls Brandon Stranzl’s efforts in 2018 to try and keep some part of Sears Canada going. Stranzl couldn’t get agreement for his proposal (which was similarly the only remotely plausible plan to maintain even a core network of stores) so he was forced to walk away and the company was completely liquidated.