TORONTO — A full liquidation at Canada's oldest company could begin as soon as Tuesday and last for up to 12 weeks, but Hudson’s Bay is still holding out hope that it will find a lifeline.
Lawyers for the beleaguered retailer said in an Ontario court Monday morning that if approved by the judge, the liquidation would span all 80 stores as well as three Saks Fifth Avenue stores and 13 Saks Off 5th locations in Canada that it owns through a licensing agreement.
The process Hudson’s Bay is proposing would allow the retailer to remove some stores from the liquidation process, should it find sufficient financing during the 10 to 12 weeks when lawyer Ashley Taylor expects the company to offload its inventory.
“A quick start will maximize the value of the business ... and preserve whatever chance there is of a restructuring,” Taylor told Ontario Superior Court judge Peter Osborne in a hearing at a Toronto courtroom Monday.
The hearing attracted so many lawyers, media and other observers that an overflow room had to be opened for spectators wanting to know what will come of the retailer that dates back to a fur trading company founded in 1670.
The hearing was meant to advance a creditor protection case Hudson’s Bay launched on March 7, when it admitted it was struggling with financial difficulties amid subdued consumer spending, Canada-U.S. trade tensions and post-pandemic drops in downtown store traffic.
It said the situation has become so bad that it deferred some payments to landlords, service providers and vendors and was days away from being unable to meet payroll obligations.
As it struggled, a landlord "unlawfully locked" Hudson’s Bay out of a store located in Sydney, N.S., and a team of bailiffs attempted to seize merchandise from a location it runs in Toronto mall Sherway Gardens, said Jennifer Bewley, the chief financial officer for Hudson's Bay's parent company, in a court filing.
When the company filed for creditor protection, Hudson's Bay lawyer Taylor said the retailer’s plan was to restructure by liquidating half its stores and monetizing some of the leases it holds in prime, high-traffic spaces.
That plan was to be carried out under debtor-in-possession financing, which lenders make available to troubled companies in order to help them restructure.
Taylor said in the run-up to the March 7 court hearing, the company had two lenders interested in supplying that funding but three hours before, the financing from its chosen suitor “fell apart” and the retailer “scrambled” to get an alternative together.
That alternative came in the form of $16 million in funding commitments from U.S.-based investment management firm Restore Capital and other lenders, which were expanded to $23 million soon after.
Despite the boost, the commitments weren’t enough to satisfy all of Hudson's Bay's needs, forcing the company to “double” its efforts to find more cash, Taylor said.
It’s since reached out to at least 19 potential lenders and major landlords who could offer rent concessions.
“To date, the company’s efforts have failed,” Taylor said in court Monday as he described why the company needed to pursue liquidation.
Osborne appeared concerned that allowing the company to liquidate and find buyers for its assets — another one of Hudson's Bay's asks — would leave the retailer with little path to restructure, let alone survive.
“I want to make sure we haven’t sold the jewels in the crown ... so to make a better outcome impossible,” he said.
The liquidation Hudson’s Bay is seeking will span the company’s entire footprint, including its four distribution centres. Ontario will take the biggest hit because it’s where the company has 32 locations, and where more than half of its employees work. B.C. hosts 16 locations, Alberta and Quebec each have 13 and Manitoba, Nova Scotia and Saskatchewan have two per province.
Saks Fifth Avenue's Canadian sites are split between Ontario and Alberta and Saks Off 5th has stores in Ontario, B.C., Alberta, Quebec and Manitoba.
Elizabeth Pillon, another lawyer who appeared on Hudson’s Bay’s behalf, said the company has about $315 million in inventory on its balance sheet right now and the proposed liquidation will extend to its e-commerce business, which will continue until the company’s Scarborough, Ont., distribution centre empties.
The liquidation was opposed by Andrew Hatnay, a lawyer representing employees, who pointed out that the wind down of Hudson's Bay will amount to one of the largest mass terminations in the country since Sears Canada folded.
He asked for the court to delay the selloff by one week, saying “once liquidation starts, it becomes a self-fulfilling prophecy" because once customers rush in to buy up all the inventory, Hudson's Bay will be left with so few options to move forward that “the business will be finished.”
"Allowing this liquidation to start virtually instantly, seals the fate," he said.
The company plans to stop accepting gift cards after April 6 and has already paused its loyalty program, with more than 8.2 million Canadian customers holding about $58.5 million in unused — now useless — points.
Hudson’s Bay is also seeking permission to launch a process to find a buyer for some or all of its properties or the business.
The process would allow potential buyers to make a bid for some of the company’s leases or just intellectual property, like Hudson’s Bay’s branding or rights to its famed stripes trademarks.
The company will also keep seeking financing. Taylor promised it will "cast the net as wide as possible” and look "anywhere we can” for money, but some experts say finding a backer will be no easy feat for a business that has struggled with even “simple” matters like keeping escalators working.
“It is a major challenge and no doubt with some large strings attached,” said Lanita Layton, a luxury and retail consultant who was once a vice-president at Holt Renfrew, in an email.
“Depending on who — if anyone — does bring the financing, I don’t foresee HBC continuing in the same format.”
She says Hudson’s Bay’s most logical path forward would be shrinking the company to a “manageable size” by operating a smaller number of stores more “conducive to today’s customer desires,” which include a unique product mix, experiential opportunities, exciting visuals and great customer service.
This report by The Canadian Press was first published March 17, 2025.
Tara Deschamps, The Canadian Press
