A Hudson’s Bay store in Vancouver in April, 2025. More than 9,300 employees lost their jobs when the department-store chain went out of business.Isabella Falsetti/The Globe and Mail
A plan to set aside more than $5-million to partly cover the loss of long-term disability and other benefits for former Hudson’s Bay employees will receive court approval to move forward.
Ontario Superior Court Justice Jessica Kimmel said during a hearing on Wednesday that she would approve the plan. It came out of nine months of negotiations between the insolvent retailer and lawyers appointed to represent more than 9,300 people who lost their jobs when the department-store chain went out of business last year.
With the court’s endorsement, “hardship funds” will soon be established to provide support to the most vulnerable among those former staffers, including paying out lump sums to cover some of the support that people on long-term disability would have received if the company had stayed afloat.
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Hudson’s Bay was granted court protection from its creditors in March of 2025, as the retailer’s losses mounted and it was unable to pay its bills. At the time, Canada’s oldest company was burdened with $1.1-billion in debt.
The Globe and Mail first revealed last April that former employees were at risk of losing their long-term disability benefits because they were paid through an “administrative services only” arrangement, which is not insured. That meant those benefits were not protected if the company went under. In May, Hudson’s Bay informed nearly 190 people who were receiving disability benefits that those payments would be cut off – but benefits were later extended as lawyers negotiated for further relief.
Unable to secure a plan for its future, Hudson’s Bay closed all of its stores across the country in June.
The extended disability benefits were set to expire on Feb. 15. The new plan will provide former staff with lump-sum payments representing the disability benefits they would have received from Hudson’s Bay either until May of 2028, or until they reached the age of 65 (when those benefits were due to end) if their birthday fell before that date.
Currently, nearly 160 people are still receiving those disability benefits, while others passed the cutoff age while the negotiations were under way.
“Most are considered permanently disabled” and are unable to work, Karen Ensslen, a lawyer with Ursel Phillips Fellows Hopkinson LLP representing the employees, told the court hearing on Wednesday.
In addition to the disability payout, the plan also provides for payments to other former Bay employees who have experienced “extraordinary hardship.” Staff will have six months to apply for those one-time payments of up to $9,600 a person, with an additional $2,500 in possible discretionary payments for medical or other emergencies.
Thousands of Canadians lost their jobs as a result of the collapse of Hudson’s Bay, which now operates as a numbered company after selling its name and other intellectual property to Canadian Tire Corp. Ltd. CTC-A-T last year.
The company is in the process of winding down its operations. What was once a nationwide retailer, with roots that stretched back 355 years, currently has just eight remaining employees.
Hudson’s Bay staff were not paid severance when they were laid off, and also lost health and dental benefits and life insurance. Former employees have been approved to apply for government support under the Wage Earner Protection Program, which is designed for cases when a company goes out of business. WEPP provides for a maximum payment of $8,844.22 a person.
Some former Hudson’s Bay executives and managers also saw their pension payments cut off last year. Another larger pension plan, covering thousands of employees, is the subject of a class-action lawsuit arguing that the retirees are entitled to the surplus in the plan.