TORONTO — Canada's oldest company, Hudson's Bay, may be on the verge of landing more time to save the six stores it has temporarily been able to rescue from liquidation.
An Ontario court has spent the last two days hearing from lawyers about a proposed restructuring plan that could help the beleaguered department store find a way forward but would also put a timeline on how long it has before it will have to sell off the remaining stores.
Ontario Superior Court Judge Peter Osborne adjourned the hearing mid-morning Thursday, promising to make a decision on the agreement later that day or early Friday.
When Hudson’s Bay first started floating the agreement, it came with an April 4 deadline forcing liquidation of the surviving six stores, if the company had no prospect of finding a saviour.
The deadline shifted to April 7. Then, as objections from landlords mounted, Bay lender Restore Capital said Thursday it would be willing to give the company until April 30.
“We don’t want to fight. We don’t want to bring a receivership application,” said Restore lawyer Linc Rogers.
“We are looking at this court and saying there is a better path forward.”
The threat of receivership — the point at which parties can no longer carry certain debt and thus must appoint a third-party receiver to sell the assets and pay bills — has been dangling over Hudson's Bay as the creditor protection process has advanced through the court.
The company has had to defer rent and payments to vendors as traffic and sales slowed but has so far avoided receivership by agreeing to liquidate all but six of its 80 Hudson’s Bay, 13 Saks Off Fifth and three Saks Fifth Avenue stores. The six that have been spared have been split between the Greater Toronto and Greater Montreal areas.
The "secured" lenders — companies whose loans are backed by collateral, thus allowing them to seize Hudson’s Bay assets to cover unpaid debt — have also been appeased by the retailer's processes to find firms to take over their leases and bid on their assets.
But landlords have argued these processes are also at odds with the restructuring agreement Hudson's Bay has asked the court to approve, despite the retailer's lawyer admitting the deal "was not a very satisfying outcome" because it lacks the stores, time and latitude the company desires.
The landlords pointed out early April deadlines in original versions of the restructuring agreement conflict with the separate "sale and investment solicitation process," which gives prospective buyers until April 30 to make bids for Bay assets.
Versions of the proposed restructuring agreement have also said the company could have more time to save its six stores if Reflect Advisors, which is advising Hudson's Bay, believes the separate sales process the retailer is running is likely to garner a buyer for any of the stores that will provide incremental proceeds greater than the cost of omitting the stores from the liquidation.
If the agreement is accepted by the court in its current state, the document would force Hudson's Bay to stick to a specific budget it would regularly outline to lenders.
Cadillac Fairview, which owns 16 of the properties where Hudson’s Bay has department stores, argued Thursday that the restructuring agreement puts the company firmly on a path to full liquidation rather than finding a way to survive.
“It is a bar to restructuring. It is not a support to restructuring,” David Bish, Cadillac Fairview’s lawyer, told the court.
He was among those that argued the company is better off pursuing a path forward through the sale and investment solicitation process the court has already approved, rather than relying on the restructuring agreement.
If the court disagrees and accepts the restructuring agreement, Bish said it will put all the control of the future of the company into lender hands.
“What you have before you offers no benefit at all to HBC," he said.
Bish's views were echoed by lawyers for fellow landlords and RioCan Real Estate Investment Trust, which has a joint venture with Hudson's Bay that sees them own or co-own 12 properties together.
D.J. Miller, a lawyer for Oxford Properties, added to Bish's arguments, saying the prospective restructuring agreement has the hallmarks of a U.S. Chapter 11 bankruptcy case rather than Canadian proceedings under the Companies' Creditors Arrangement Act.
Restore disagreed with their arguments but offered the April 30 concession because "we are not looking to pick fights."
"We are looking to resolve issues," Rogers said Thursday.
The day before, he pointed out Hudson’s Bay's landlords were 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.
However, Linda Galessiere, a lawyer for landlords Ivanhoe Cambridge, Cushman and Wakefield, and Morguard, described a different series of events.
She said lenders were not asked to support Hudson's Bay with debtor-in-possession financing, emergency funding given to a distressed company.
"The landlords were asked to make a donation not a deferral, not a loan. A donation that exceeded over $70 million if they don’t include RioCan," she said.
"If RioCan were asked for the same donation, it would be over $100 million."
This report by The Canadian Press was first published March 27, 2025.
Tara Deschamps, The Canadian Press
