Hudson's Bay had exempted six stores from clearance sales in the hopes of finding a buyer or investor, but later added those stores, marking the demise of the 355-year-old retail chain.Nathan Denette/The Canadian Press
One of Hudson’s Bay Co.’s senior lenders is suing for repayment of US$8.8-million it says it’s owed by Saks Global Enterprises LLC – the U.S. company formed last December when parent HBC acquired Neiman Marcus in a US$2.65-billion deal and spun off its American assets into a separate entity from the Canadian retailer.
The lender, Pathlight Capital LP, agreed to restructure HBC’s existing debt in December and to release the new U.S. company, Saks, from its obligations under the Canadian loan. That move was “critical” to completing the Neiman Marcus deal, according to a complaint filed by Pathlight with the New York Supreme Court on May 21.
The document accuses Saks Global of a breach of contract for failing to pay fees related to that debt restructuring. The filing also reveals that Saks Global has accused Pathlight of failing to support further debt restructuring for Hudson’s Bay, contributing to the failure of the Canadian company to secure much-needed financing earlier this year.
The plan that could have saved Hudson’s Bay as we know it
On March 7, less than three months after the Neiman Marcus deal closed and the carve-out of the companies was finalized, Hudson’s Bay filed for court protection from its creditors in Canada under the Companies’ Creditors Arrangement Act (CCAA). Court documents showed the retailer was struggling with $1.1-billion in debt and running out of cash to fund its operations.
Pathlight’s portion of that debt amounted to US$65.6-million as of March 7 – an amount significantly lower than what Hudson’s Bay owed before the December deal, lawyers for the retailer said during a court hearing in Toronto on May 13.
Pathlight’s loan to HBC and its subsidiaries, including Saks, dates back to 2020, according to the complaint filed in New York. HBC asked Pathlight to restructure that outstanding debt “to facilitate” the Neiman Marcus acquisition and the spinoff, the document states.
Pathlight agreed, extending a term loan to HBC in December of 2024, and releasing the new U.S. entity Saks Global from its obligations under the Canadian loan. In exchange, Saks agreed to pay Pathlight a structuring advisory fee totaling US$13.8-million. That fee was due in three instalments with US$5-million owed in January, and US$4.4-million due in each of March and April of this year.
On March 26, according to the claim, Saks Global sent a letter to Pathlight saying that it would not pay the remaining two instalments, because of “Pathlight’s alleged refusal to agree to further restructurings of HBC’s debt.”
The letter, submitted in court, also alleged that Pathlight’s “lack of good faith cooperation” was the direct cause of Hudson’s Bay failing to secure refinancing. That in turn led the Canadian company to seek creditor protection, the letter stated.
“Pathlight’s ongoing intransigence further frustrated HBC’s CCAA proceedings, and, on March 21, 2025, forced HBC to announce a near total liquidation,” Saks chief legal officer Andrew Woodworth wrote in the letter.
Pathlight’s claim calls these allegations “baseless.”
A representative for Saks did not respond to a request for comment.
Hudson’s Bay initially exempted six stores from the clearance sales, hoping to find a buyer or investor willing to support a restructuring plan.
But when no such support emerged, the retailer announced in late April that it would add those stores to the liquidation, marking the demise of the 355-year-old retail chain and the loss of thousands of Canadian jobs.
The deal last December consolidated ownership of Neiman Marcus, Saks Fifth Avenue, Saks Off 5th and Bergdorf Goodman under the new U.S. company.
But signs of trouble soon followed at Saks, including delayed payments to vendors, according to reports. On June 30, roughly US$120-million in interest is coming due on US$2.2-billion in bonds that the company sold in order to finance the deal.
On Thursday evening, Saks announced that it had secured US$350-million in financing “to strengthen its balance sheet and support its long-term growth.”