An person walks past the Hudson’s Bay store in downtown Calgary, on March 10.Amir Salehi/The Globe and Mail
When Jason Thompson first received a call from Hudson’s Bay Co. in late 2023, he thought it was an opportunity to win a large new client and expand his family-owned office supplies business.
Instead, Mr. Thompson has faced more than a year of delays, as the department store retailer failed to pay roughly $80,000 it owed to his Indigenous-owned company, Superior Strategies Inc., based in Thunder Bay.
Superior and its subsidiary, Warrior Office, had been in regular contact with the vice-president for Indigenous relations at Hudson’s Bay about the case. Last week, Mr. Thompson says a representative from the retailer had assured him they were working on a payment plan for the “thermal printer rolls” of receipt paper he supplied in October, 2023.
Days later, he was surprised to see the news that Hudson’s Bay had gone into creditor protection.
“I thought they were going to make good, based on the letter I got,” he said in an interview. “It’s had a pretty significant impact on our business.”
Mr. Thompson is just one of a number of vendors and suppliers that now find themselves in limbo, with overdue payments from Hudson’s Bay that they worry could be at least partially wiped out during the retailer’s restructuring process.
Facing a financial crisis, Hudson’s Bay began proceedings late last week under the Companies’ Creditors Arrangement Act (CCAA). The retailer acknowledged in court documents that it had fallen months behind on rent and on payments to its vendors.
The Globe and Mail has reported that Hudson’s Bay is working on a restructuring plan that could see it close half of its 80 department stores, depending on whether it can secure financial assistance from its landlords, according to two sources familiar with the matter.
Mr. Thompson says he feels a particular kind of frustration in his case. The first call from Hudson’s Bay in 2023 came on Sept. 30, the National Day for Truth and Reconciliation, he recalls.
“The long-standing history that HBC has with Indigenous people – the irony that this all happened on that day,” said Mr. Thompson, a member of the Red Rock Indian Band, an Ojibwa First Nation in Northwestern Ontario.
Hudson’s Bay was founded in 1670 through a royal charter that granted a trading monopoly to the company, covering a vast territory of the north – about one-third of what is now Canada. It relied heavily on Indigenous traders and guides for its profits in the fur trade.
In 2022, the company transferred ownership of its flagship building in Winnipeg to a group representing 34 Manitoba First Nations, a decision that was seen as a form of economic reconciliation. Mr. Thompson said he had been impressed by the news.
In 2023, his dealer for the paper he sold to Hudson’s Bay required payment up front, so Warrior Office put up the cash – more than $55,000. The purchase price to Hudson’s Bay was $79,361, including tax.
“That’s money we needed to grow our business,” he said, adding that he had considered hiring a collection agency, but hesitated to spend more money on the account and had received assurances he would be paid.
“While very difficult, it was necessary for Hudson’s Bay to seek creditor protection. As part of the CCAA process, payments to creditors including vendors are stayed at this time,” Hudson’s Bay spokesperson Tiffany Bourré wrote in a statement on Monday.
“The company is exploring strategic alternatives and engaging stakeholders to explore potential solutions to preserve and restructure its business.”
Restructuring is a broad term that can involve various ways that companies move forward, including selling the operations to new owners or investors, or putting forward a plan that may involve shedding some of its debt by paying only a portion of what some creditors are owed.
“Most retail insolvencies probably result in under 20 cents on the dollar received by unsecured creditors,” said Steven Graff, a partner with Aird & Berlis LLP, whose practice focuses partly on restructuring and insolvency. But he stressed that any guess at the outcome with Hudson’s Bay is purely speculative.
“The challenge for unsecured creditors is that they would like to be heard, and to make sure that the process is treating them fairly. But it is difficult if you’ve lost a chunk of money to then go and hire lawyers to try to help you, when that can be quite an expensive process as well,” said David Ullmann, a partner with Blaney McMurtry LLP who specializes in restructuring.
He added that there have been examples of unsecured creditors forming groups or committees to represent their interests.
“The court system tries to hear from all stakeholders and tries to be aware of making the process as fair as it can.”
Mr. Thompson said that while he was pushing for payment from Hudson’s Bay, he had heard about the retailer’s difficulties.
“I feel for them, but this is money you’ve taken out of my pocket,” he said. “At the end of the day, all they were doing was passing on their troubles to us.”