A person walks by a closed Hudson's Bay store in a mall, on March 20, in Hamilton, Ont.Katherine KY Cheng/Getty Images
Hudson’s Bay Co. has received court approval to begin liquidating all but six of its department stores across Canada, starting on Monday, though the company is still hoping to save some locations.
The faltering retailer changed its plans for the liquidation – removing the six stores from the process for now – after sales spiked at Bay locations in recent days, lawyers for Hudson’s Bay said in court on Friday. The locations not immediately included in the liquidation are the flagship downtown stores in Toronto and Montreal; and those in Yorkdale Shopping Centre in Toronto; Hillcrest Mall in Richmond Hill, Ont.; CF Carrefour Laval in Laval, Que.; and CF Fairview Pointe-Claire in Pointe-Claire, Que.
Inventory clearance sales will proceed at the 74 remaining Hudson’s Bay stores across the country, as well as two Saks Fifth Avenue and 13 Saks Off Fifth stores that the company operates in Canada. The downtown Toronto store includes a Saks location, which is also not being liquidated at this time.
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Hudson’s Bay was first granted protection from its creditors under the Companies’ Creditors Arrangement Act on March 7. The following week, the company announced that it had secured only limited financing, which would “require the full liquidation of the entire business,” unless an alternative source of “significant capital” could be found, according to a press release.
Reports of the Bay’s imminent demise were apparently just what the retailer needed to bring shoppers back to the moribund stores. From March 8 to 14, Hudson’s Bay reported nearly $21-million in sales, roughly $7.4-million more than expected, according to documents filed in the Ontario Superior Court of Justice on Friday.
As a result, Hudson’s Bay no longer needed additional emergency financing to run the closing sales, and is now also able to repay the initial financing it secured earlier this month to keep the company afloat, Ashley Taylor, a lawyer with Stikeman Elliott LLP representing the retailer, said during the court hearing on Friday.
In addition to approving the liquidations, on Friday the court also authorized Hudson’s Bay to begin the processes of looking for buyers for all or part of the business, and of monetizing its store leases. The CCAA proceedings have now been extended to May 15.
Hudson’s Bay initially secured $16-million in debtor-in-possession (DIP) financing, a type of loan designed to allow companies to continue operating while undergoing a restructuring process. While the company subsequently was able to expand that financing to $23-million, that amount only allowed for liquidation of the stores and did not support restructuring to allow the business to continue operating, according to Hudson’s Bay.
Canada’s oldest company will begin liquidating the majority of its stores starting on Monday after a court approved the move. The six stores that will continue on are in the Toronto and Montreal areas and, though Hudson's Bay has enough money to keep them going for now, it will need to secure further financing to keep them open permanently. (March 21, 2025)
The Canadian Press
Because of the surging sales, the company no longer required the expanded loan, and received court approval on Friday to repay the initial $16-million to the DIP lenders, a group led by ReStore Capital LLC, an affiliate of Hilco Global that specializes in distressed debt.
The survival of Canada’s oldest retailer is far from certain, and the jobs of its more than 9,300 employees remain at risk. Most are facing layoffs under the current scenario, said Andrew Hatnay of Koskie Minsky LLP, who is representing some Hudson’s Bay employees. This would lead to “substantial” severance claims against the company, estimated at more than $100-million, he said.
However, Hudson’s Bay has told employees they will not be paid severance, according to an internal memo obtained by The Globe and Mail.
The liquidation sales will conclude by June 15, with stores to be entirely vacated by June 30. Hudson’s Bay is in discussions with its landlords about whether there might be an opportunity to restructure the operations in order to save the remaining six locations.
“However, the time to do so remains very short,” Mr. Taylor said at Friday’s hearing. “I want to be crystal clear with the court: The company does not currently have an agreement on which it could base a restructuring plan.”
If a solution can be found, additional stores beyond those six could still be removed from liquidation, Mr. Taylor said. However, if alternatives do not emerge very soon, the six exempted stores could also be added to the closing sales.
“We’re working hard to find a restructuring solution,” he said.
The company has also reached a restructuring support agreement with its senior lenders. But because the details of that agreement were only provided to other affected parties very shortly before the hearing on Friday, Ontario Superior Court Justice Peter Osborne delayed consideration of that plan until next week.
Hudson’s Bay also has sufficient funds now to pay a portion of the rent on properties it co-owns through a joint venture with RioCan Real Estate Investment Trust. The retailer previously received court approval to suspend rent payments on those properties, something that RioCan objected to as unfair. Hudson’s Bay will now pay approximately 70 per cent of the rent going forward, as well as rent it owes that was previously suspended.
“This is a good news day for all the parties. Any day without complete liquidation is a good day,” Joseph Pasquariello, a lawyer with Goodmans LLP representing RioCan, said during Friday’s hearing.
Mr. Hatnay, the lawyer representing some employees and retirees, disputed that. “This is not a good news day,” he said at the hearing. “This is the demise of HBC, slowly but surely, which is unfortunate.”
Hudson’s Bay has been in discussions this week with landlords and lenders, many of whom objected to the terms of its initial plans for liquidation.
The retailer had been seeking support from landlords recently, in an attempt to keep some locations open. The Globe was first to report last week that Hudson’s Bay had a plan to save roughly half of its 80 Bay locations. That would have required concessions from landlords, including possible investments and suspension of rent. Those discussions were unsuccessful.
“This is the art of the possible, and we are where we are for today,” Justice Osborne said. “In my view there is no alternative but to approve the liquidation effective immediately, to maximize the chances of success.”
Editor’s note: The Globe received additional information from HBC on Monday, March 24, and this article has been updated accordingly to specify that the downtown Toronto Saks Fifth Avenue store is also exempt from liquidation.
Share your memories and thoughts about The Bay
The Hudson's Bay Co. is literally older than Canada itself, and people from coast to coast have grown up with various versions of the store and its iconic striped merchandise. Do you have a strong memory involving The Bay to share? Perhaps you registered for your wedding or made a meaningful purchase there, worked at a location or simply recall a different time for department stores. We want to hear about it. If you'd like to send us a photo related to your submission, send it to us in an email at audience@globeandmail.com with “Bay memories” in the subject line.