People walk through the Hudson's Bay Company's flagship store in Toronto, on March 17.Cole Burston/The Globe and Mail
Hudson’s Bay Co. went to court on Monday seeking approval for a plan to begin liquidating all of its stores as early as this week, though lawyers for the faltering retailer said they still hope to find an alternative solution to preserve part of the business.
At the hearing, Hudson’s Bay was seeking approval for a plan to begin selling off the inventory and fixtures at its 80 namesake department stores and four distribution centres, as well as three Saks Fifth Avenue and 13 Saks Off Fifth stores that the company operates under licence in Canada.
At the same time, the company was seeking approval to begin the process of looking for a buyer for all or part of the business, as well as to sell off property and leases.
Starting the process quickly would give Hudson’s Bay the best chance to maximize the value of the business, and to find an alternative plan to preserve at least part of the operations, Ashley Taylor, a lawyer with Stikeman Elliott LLP representing the retailer, said during the hearing at the Ontario Superior Court of Justice in Toronto. Certain stores could be removed from the liquidation process if such an alternative emerges, he added.
“What we do know is that we need to bring in additional capital to make it possible,” Mr. Taylor said. “And we are looking anywhere we can for that capital. We need to cast the net as wide as possible, looking for solutions here.”
If the company cannot find a buyer or investors willing to provide financing, the stores could be emptied out within 10 to 12 weeks from the start of the clearance sales.
The process throws into question the future of Canada’s oldest retailer, and the jobs of more than 9,300 employees.
Explainer: What to know about Hudson’s Bay liquidation sales
Hudson’s Bay was granted court protection from its creditors on March 7 under the Companies’ Creditors Arrangement Act (CCAA). The Globe and Mail was first to report last week that the company had an initial plan to keep roughly 40 of its Hudson’s Bay stores open, a scenario that would require concessions from landlords, including waiving rent payments for a period of time, and possible investments by those landlords to keep those locations open.
On late Friday, however, Hudson’s Bay announced that discussions with landlords had so far been unsuccessful. The company 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.
Monday’s court hearing provided additional insight into the difficulty Hudson’s Bay has had in securing financing to keep the 355-year-old company afloat.
Hudson’s Bay began reaching out to potential lenders in early February to seek debtor-in-possession (DIP) financing, a type of loan designed to allow companies to continue operating while undergoing a restructuring process. However, an initial DIP financing agreement fell apart just three hours before the CCAA filing on March 7, Mr. Taylor said at the hearing.
Instead, the company had to scramble just to secure $16-million in initial financing, Mr. Taylor said. That has now been expanded to $23-million, an amount that does not support a restructuring that would let the business continue operating, but only allows for a liquidation of the stores, according to Hudson’s Bay.
The interim financing comes from a group of lenders led by Restore Capital LLC, an affiliate of Hilco Capital Ltd., a British private equity firm that specializes in turning around distressed companies.
The hope now is that the company can find additional money, and that “one or more parties will step up” to provide the funding necessary to pull some of the stores out of liquidation, Mr. Taylor said.
“As it stands right now, the math doesn’t work,” he said.
Landlords have provided financing to Hudson’s Bay in the past, including a $200-million term loan from Cadillac Fairview Corp. Ltd. in 2023. RioCan Real Estate Investment Trust, which owns a stake in a number of Bay locations through a joint venture with the retailer, also provided additional financing to that venture as recently as last October, according to court documents.
At Monday’s hearing, lawyers for the retailer’s landlords expressed concern about the impact that liquidation sales would have on malls, whose image could be affected by hosting clearance sales. The process could also be a drag on other retailers’ business, since the deep discounts offered in such sales hurts other stores’ ability to attract shoppers to product at regular prices.
Shoppers say it’s sad to see what’s happened to the venerable Canadian department store Hudson’s Bay. Canada's oldest company is waiting for court approval on a full liquidation, which could begin a few days from now and last for up to 12 weeks, but Hudson’s Bay is still holding out hope that it will find a lifeline. (March 17, 2025)
The Canadian Press
At the conclusion of Monday’s hearing, Justice Peter J. Osborne encouraged the retailer and its landlords to continue discussions, and to “lower the temperature.”
The judge also expressed concern at the hearing that as Hudson’s Bay seeks to sell store leases and other assets, it could jeopardize the company’s ability to find an alternative solution.
“I want to make sure we haven’t sold the jewels in the crown, as it were, so to make a better outcome impossible,” Justice Osborne said.
A lawyer representing Hudson’s Bay employees and retirees opposed the liquidation moving forward quickly, raising the concern that it would lead to “one of the biggest mass terminations in Canada” since the failure of Sears Canada. Of the company’s thousands of staff across the country, roughly 647 are unionized, according to court documents.
“Once a liquidation starts, it becomes a self-fulfilling prophecy,” Andrew J. Hatnay of Koskie Minsky LLP said, adding that once shoppers rush in to buy up discounted merchandise and signs go up saying locations are closing, “that seals the fate of this company.”
Hudson’s Bay is working to keep employees informed, Stikeman Elliott lawyer Elizabeth Pillon said during the hearing. In response to Mr. Hatnay’s concern about the possibility of a windup of the company’s pension plan, Ms. Pillon said that the plan is in a surplus, and that the retailer would avoid a similar situation to Sears Canada, whose retirees saw their pensions cut.
If it obtains court approval, Hudson’s Bay will look for buyers for its leases, and could also sell off operations as well as intellectual property including its iconic stripes and point blanket designs.
Any sale of the company would have to involve repaying its senior debt, Hudson’s Bay Co. ULC chief financial officer Jennifer Bewley wrote in an affidavit filed in court Friday.
As of March 7, Hudson’s Bay had $430-million outstanding under three credit facilities. The company also carries $724.4-million in mortgage debt, for a total of $1.1-billion in outstanding secured debt obligations as of that date.
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.