A historic chapter is closing this Sunday, as Canadians prepare to say a final goodbye to Hudson’s Bay — a company that has been at the heart of Canadian retail for centuries.
At the same time, Canadian Tire’s purchase of Hudson’s Bay’s intellectual property, along with B.C. billionaire Weihong Liu’s bid for 28 store leases, offers a glimmer of hope amid the doom and gloom.
Here, the Star explains how Hudson’s Bay got here, what’s next for its more than 9,000 employees, and whether any part of the retailer’s legacy can live on.
When are Hudson’s Bay stores closing?
Hudson’s Bay will close the doors of all its stores across the country on June 1, when it completes the liquidation sales at 80 Bay stores (36 located in Ontario), three Saks Fifth Avenue stores and 13 Saks Off 5th stores.
This also marks the largest wave of layoffs since the closure of Sears Canada in 2018, which put 12,000 people out of work.
Over the past two months, liquidation proceeds have exceeded Hudson’s Bay’s expectations. Shoppers flocked to stores in search of bargains — with discounts rising from 20 to 80 per cent over time.
Hudson’s Bay honoured gift cards until April 6 but has suspended the loyalty program since it filed for creditor protection.
How did we get to this point?
Hudson’s Bay, saddled with over $1 billion in debt, applied for creditor protection under the Companies’ Creditors Arrangement Act on March 7 to restructure its business.
After initially planning to close 40 stores, the retail icon applied to the Superior Court of Justice within a week for a full liquidation of its entire business. The company said “exhaustive” efforts failed to secure the financing needed to pursue restructuring, and the group of lenders that provided $16 million to fund operations during the proceedings demanded an immediate liquidation to maximize recovery.
On March 21, the court granted Hudson’s Bay permission to liquidate all but six stores including the flagship store at Yonge and Queen streets in Toronto and three Quebec locations.
The retailer wanted to attract buyers interested in keeping those six stores running as a functioning business and excluded those locations from liquidation for a month — until it concluded that finding a viable restructuring solution was “unlikely.”
Why is Canadian Tire buying Hudson’s Bay’s IP?
Hudson’s Bay received 17 bids in a sales process of its leases, real estate and intellectual property in a last-ditch attempt to find buyers and investors to save its business.
On May 15, Canadian Tire announced that it purchased Hudson’s Bay’s intellectual property for $30 million, including its name, logo and iconic multicoloured stripes. The sale is pending court approval next Tuesday.
The stalwart retailer of automotive and home products also placed separate bids on a handful of leases. While it’s unknown whether those bids will be successful, experts told the Star it’s unlikely Canadian Tire will operate the stores under the Hudson’s Bay name. A more likely scenario is that Canadian Tire will use the Hudson’s Bay trademarks as a private label, continue selling the iconic stripes, or place the logo on other products.
Who is Weihong Liu and what is her vision for Hudson’s Bay?
The Star first reported in April that B.C. billionaire Weihong Liu emerged as a surprising contender to acquire Hudson’s Bay, using the Chinese social media platform Rednote as an outlet to express her interest in buying dozens of the retailer’s stores.
Liu, chairwoman of shopping mall owner and operator Central Walk, said in several videos posted on Rednote that she saw this as “a once-in-300-years opportunity” and was inspired to buy Hudson’s Bay stores after witnessing Canadians’ sadness over the closure.
While losing the bid for the retailer’s IP to Canadian Tire, Liu signed a purchase agreement with Hudson’s Bay for 28 store leases in three provinces and plans to transform them into “modern department stores.” She said on Rednote that she wants to operate the stores under the name “New Bay.”
Her business plan for the 28 leases remains unclear, and her bid is subject to landlord consent or court approval.
What happens to Hudson’s Bay employees?
More than 9,000 Hudson’s Bay employees have been or will be terminated without severance pay while the company put aside nearly $3 million to pay bonuses to 121 “key” managers and executives assisting with the wind-down of the business.
The retailer also ended several benefits since the liquidation began, including pension payments to some former senior executives, post-retirement health and dental benefits for 2,000 retirees and certain long-term disability benefits to about 183 employees.
Following a fight over the appointment of employee counsel in court, law firm Ursel Phillips Fellows Hopkinson LLP was appointed to represent Hudson’s Bay’s current and former employees and retirees.
Hudson’s Bay will apply to the court next Tuesday to declare that it meets the criteria for the federal Wage Earner Protection Program, which would trigger employees’ entitlements to benefits under the program.
What happens after the stores are closed?
Hudson’s Bay has not announced the other winning bidders for its assets apart from Canadian Tire and Liu. Any asset sales will require the court’s approval.
Once the liquidation and sales of other assets are completed, the retailer will use the cash left in hand to first pay back its four secured creditors — Bank of America, ReStore Capital, Pathlight Capital LP, and Cadilac Fairview — which are owed a collective $430 million.
If anything is left over, it will be distributed to nearly 1,900 unsecured creditors — including landlords, fashion brands and banks — who are collectively owed $950 million, as well as to thousands of employees not yet accounted for on the creditor list.
The retailer’s extensive collection of 1,700 pieces of art and more than 2,700 artifacts, including the 1670 charter document that paved the way for the company’s founding, will be sold at an auction.
