Canada’s Oldest Company, Hudson’s Bay, Tries to Avoid Full Liquidation



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Hudson’s Bay Co. fought to avoid a full shutdown in a Toronto courtroom on Monday, asking for permission to begin liquidating most of its stores this week.

A lawyer for Canada’s oldest company, Ashley Taylor, said HBC’s efforts to solve its cash flow crisis have “failed.” Taylor also told a standing-room-only crowd at the Ontario Superior Court of Justice that if the retailer can’t find a workable solution with its creditors and landlords, it would need to fully liquidate.

HBC, which owes about C$1.1 billion ($770 million) in secured debt, sought authorization to sell inventory over the next three months to raise cash. Justice Peter Osborne adjourned the proceedings Monday without a decision.

HBC was founded in 1670 — before Canada itself — to conduct trade in a large swath of what was then British North America. The company currently operates 104 stores and employs more than 9,300 people. HBC owns Hudson’s Bay, TheBay.com and Saks Fifth Avenue, and is North America’s longest continuously operating company.

HBC argued in a release Friday that avoiding a full liquidation would allow it to preserve jobs. The company identified at least 121 key employees and 25 store locations needed for a partial liquidation process, according to Alvarez & Marsal Canada Inc., the company monitoring the creditor proceedings.

Earlier this month, the court approved a debtor-in-possession financing facility — a type of financing for companies facing bankruptcy — of C$16 million to cover operations during the liquidation period. The amount increased to C$23 million, according to a term sheet dated Monday.

The court heard concerns Monday about rent owed to commercial real estate landlord RioCan REIT, with which HBC has a joint venture for 12 properties.

The court agreed earlier this month to suspend HBC’s rent payments to the joint venture, which amount to approximately C$10 million per month. RioCan filed a motion Friday to have that suspension overturned, calling it “unprecedented.”

“RioCan is of the view that the rent suspension is not fair or reasonable treatment,” the motion said, “and is inconsistent with the law.”

Most of HBC’s rent payments have been delayed, the monitor’s report said.

Over the years, brick-and-mortar stores have struggled to compete with e-commerce businesses as shopping habits shifted. HBC went private in March 2020 in a C$1.1 billion deal.

The severity of the Covid-19 pandemic inflicted deeper wounds on the company’s sales, and it has been unable to fully recover its store foot traffic and sales since, HBC told the court.

By Stephanie Hughes

Learn more:

Canadian Retailer Prepares to File for Bankruptcy

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