Lawyers for ex-Hudson’s Bay employees ask court to approve hardship fund

Shoppers enter the Hudson's Bay store in downtown Calgary, Alta., Thursday, March 20, 2025. THE CANADIAN PRESS/Jeff McIntosh

TORONTO — Lawyers representing former Hudson’s Bay employees are asking a court to approve two new mechanisms meant to help staff cope with the fall of the department store.

A motion filed Wednesday by Ursel Phillips Fellows Hopkinson LLP asks the Ontario Superior Court next week to allow for the creation of a hardship fund to help ex-staff struggling with bills and approve an agreement designed to support workers receiving long-term disability benefits.

The proposed hardship fund is meant to help former HBC workers and retirees who have been having trouble covering rent, mortgages, utilities, car loans and medical expenses since the department store collapsed last year.

If the fund is approved, workers who demonstrate need could receive one-time payments of up to $9,600 and those with medical or other emergencies could be given up to $2,500 extra.

Court filings say the fund will get cash from three sources: a Zellers health and welfare trust valued at about $9.9 million, an HBC reserve fund worth about $1.6 million and $250,000 the department store currently has on hand.

HBC acquired Zellers, once a discount department store, in 1978 but has since sold off the rights to the name.

Along with the hardship fund, the lawyers want a court to approve a lump-sum termination payment for former HBC employees who were told their long-term disability benefits were being suspended last June.

The law firm negotiated for continued payments and now says the lump sum it is proposing will be enough to help many of the recipients until they are 65.

It will also give them income security, certainty and time to arrange their financial affairs.

“This agreement will provide significant assistance for some of the most vulnerable employees affected by this insolvency, who are unable to find alternative work because of their disability and who were otherwise facing the immediate loss of their primary source of income,” lawyer Susan Ursel said in a statement.

When Hudson’s Bay, once Canada’s oldest department store, filed for creditor protection and closed all of its locations last year, it had 9,364 employees. They worked at 96 stores under the HBC and Saks banners and at four distribution centres or at the company’s headquarters.

Only eight employees remain with the retailer, which is still unwinding through court.

Since HBC collapsed, Ursel Phillips Fellows Hopkinson LLP says workers have faced loss of income and benefits, termination pay, severance amounts, parental leave top-ups and various other monetary perks.

About 188 employees and retirees were covered by long-term disability plans funded through HBC’s general revenues and administered by Manulife, court records say.

This report by The Canadian Press was first published Feb. 4, 2026

Tara Deschamps, The Canadian Press