Hudson’s Bay seeks court agreement that offers little time to save six stores

Pedestrians pass the Hudson's Bay building in downtown Calgary, Alta., Thursday, March 20, 2025. THE CANADIAN PRESS/Jeff McIntosh

TORONTO — Hudson’s Bay asked an Ontario court Wednesday to approve a restructuring agreement that will give it a short timeline to save the six stores it has so far spared from liquidation.

A new version of the agreement will force the retailer to start liquidating those stores on April 8, if it hasn’t found a likely transaction to give it a way forward by April 7 — three days after the deadline it originally asked for.

If Reflect Advisors, a financial advisor to Hudson’s Bay, believes a separate sales process Hudson’s Bay is running is likely to garner a buyer for any of the six stores that will provide incremental proceeds greater than the cost of omitting the stores from the liquidation, the agreement allows for an extension beyond the April 7 deadline.  

Ashley Taylor, a lawyer for Hudson’s Bay, told Ontario Superior Court judge Peter Osborne the agreement wasn’t “a very satisfying outcome.”

It wasn’t exactly what the department store, which holds the title of Canada’s oldest company, wanted either, he reasoned, but it was the best arrangement it could find.

“The company wanted more stores. The company wanted more time. The company wanted more latitude,” Taylor said.

Hudson’s Bay’s request for approval on the restructuring agreement comes as the bulk of its 80 stores, 13 Saks Off Fifth locations and three Saks Fifth Avenue shops entered liquidation sales this week.

Last week, strong sales allowed the company to temporarily save its Toronto flagship location on Yonge Street, a store in the city’s Yorkdale mall and another at Hillcrest Mall in Richmond Hill, Ont. The remaining three survivors are located in the downtown Montreal area, Carrefour Laval mall and Pointe-Claire, Que.

The liquidation happening at the remainder of Hudson’s Bay’s stores is part of a creditor protection case the company began in early March, when it said it was facing financial difficulties that were so significant they threatened the company’s ability to continue operating.

Some parties involved in the court proceedings are opposing Hudson’s Bay’s request to approve the restructuring support agreement.

One of those parties is RioCan Real Estate Investment Trust, which has a joint venture with Hudson’s Bay that sees them own or co-own 12 properties together.

A motion it has filed argues the proposed restructuring agreement’s early April deadline is at odds with another process the court approved Friday to facilitate a search for potential investors or buyers for portions of the business.

That exercise, known as the sale and investment solicitation process, asks potential buyers interested in owning some of the company to place bids by April 30, a motion filed by RioCan says.

Because the timelines conflict, the real estate company’s lawyers say approval of the restructuring agreement would “limit any chance HBC has” of finding a way forward.

One of the RioCan lawyers, Joseph Pasquariello, compared it to “snatching the steering wheel from the company and driving it toward the liquidation result.”

“The court has to continue to put the brakes on the approach,” he warned.

Several of Hudson’s Bay’s senior secured lenders — Bank of America, Pathlight Capital and Restore Capital — disagreed.

Pathlight’s lawyers said in a written submission that “giving effect to the landlords’ objections would serve to effectively prefer unsecured landlords’ interests to those of the interests of the company’s secured creditors.”

Secured lenders like Pathlight have collateral that backs or “secures” the loan, which allows them to take Hudson’s Bay assets to cover unpaid debt. Unsecured lenders do not have this safety net.

Linc Rogers, a lawyer for Restore Capital, also took issue with the landlord’s stance.

He pointed out every one of Hudson’s Bay’s landlords was offered a chance to give the company rent concessions or provide financing to help the company avoid its current situation, but all of them declined to help.

“We found a way forward to avoid chaos,” he said in court, arguing the restructuring agreement should move forward.

Rogers’ oral submission was interrupted when several of the more than 200 users viewing the court proceedings over Zoom broadcast sexually explicit videos. The judge quickly ordered the stream shut down.

When the hearing reconvened after a break to find a way to stream proceedings while minimizing the chance of another disturbance, Osborne apologized to those in attendance for being subjected to the “unfortunate disruption.”

Later, he adjourned the case for the day, when a new webcast the court set up to broadcast proceedings experienced audio issues. 

The adjournment came before Andrew Hatnay, a lawyer representing employees, was able to make any oral submissions. 

A written filing he made opposed the approval of the restructuring agreement because it would limit the legal representation the company’s almost 9,400 employees can seek and how that representation is funded. 

He said the agreement would have a “vice-like grip on what HBC can do” and “pre-emptively prohibits any attempts to provide representative counsel to those employees who are now tasked with ensuring that HBC’s liquidation actually happens so that those same lenders will be repaid.”

On top of losing their jobs, he said employees have been told by Hudson’s Bay that they will not receive severance, which he estimates could have collectively totalled more than $100 million. 

Also at stake are pensions, health benefits and long-term disability supports, which affect a group of people he said are “extremely vulnerable as they cannot work and are highly dependent on their long-term disability benefits for their livelihoods.”

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Tara Deschamps, The Canadian Press

This report by The Canadian Press was first published March 26, 2025.