An Ontario court ruled Tuesday that while Hudson’s Bay has closed its doors for good, its intellectual property will live on through another icon of retail — Canadian Tire.
Two days after winding down all store operations, Hudson’s Bay secured approval from the Superior Court of Justice for a $30-million deal with Canadian Tire, which now owns the rights to Hudson’s Bay’s name, trademarks, coat of arms, and iconic stripe design.
“The Canadian Tire deal represents the highest purchase price and the best offer” among all 17 bids submitted during Hudson’s Bay’s last-ditch effort to find buyers or investors for its retail business, said Ashley Taylor, a lawyer representing Hudson’s Bay.
The end of liquidation sales on Sunday was “a milestone, but an unhappy one,” said Justice Peter Osborne in court, adding that the Canadian Tire transaction is the best possible outcome.
The court also granted RioCan permission to place a joint venture involving 12 properties co-owned with the retailer into receivership, while setting in motion the process for more than 9,000 employees to claim money they are owed through the federal Wage Earner Protection Program (WEPP).
While hearing statements from Taylor about the IP, Osborne raised concerns about whether Hudson’s Bay’s royal charter — the historic document that enabled the creation of the 355-year-old retailer — is part of the sale to Canadian Tire.
Hudson’s Bay’s collection of more than 1,000 artifacts and archives, including the charter dated back to 1670, is expected to be sold at a later auction. However, Osborne pointed to court documents indicating that two trademarks related to the royal charter are listed among the 300 pages of IP assets included in the Canadian Tire transaction.
“I just want to make sure I understand what’s being sold and purchased and what the parties think they’re selling and purchasing here,” Osborne said, noting he wants to avoid a situation where Canadian Tire later disputes the rights to the charter after it is auctioned off.
The justice’s question caught Taylor and the other Hudson’s Bay lawyers off guard, prompting them to step out of the courtroom for about 20 minutes to seek clarity from related stakeholders.
The confusion was resolved when Taylor returned and explained that the two charter trademarks are tied to specific products — a coffee brandy and a whisky — and are unrelated to the historic charter itself.
More than 8,000 employees were terminated without severance by Sunday, the final day of operations for Hudson’s Bay’s more than 80 stores across Canada, with the remaining 1,000 staff members expected to be let go in the coming months.
The WEPP allows affected workers to receive a one-time payment of up to seven weeks of insurable earnings, to a maximum of $8,844.
The lawyer representing Hudson’s Bay and the court-appointed monitor overseeing the retailer during its creditor protection proceedings said Tuesday they are working on a timeline for when employees will be able to access their benefits.
“We want to get the benefits to the employees’ hands as soon as possible. We’re working with Services Canada,” said Sean Zweig, lawyer for monitor Alvarez & Marsal Canada. “This is, in fairness to Service Canada, a very large undertaking.”
Taylor told the court on Tuesday that Hudson’s Bay has completed the process of monetizing its leases and has returned most of the 62 leases that drew no interest to their landlords.
The company will report back to court next week to seek approval for several lease transactions, including an agreement to reassign up to 28 leases to B.C. billionaire Weihong Liu.
The sales process for Hudson’s Bay’s assets yielded no bids for the properties held in a joint venture in which RioCan owns a 22 per cent stake, according to Joseph Pasquariello, a lawyer representing RioCan Real Estate Investment Trust.
The joint venture, — formed in 2015 — includes 12 Hudson’s Bay properties, including locations in downtown Montreal, Vancouver, Calgary, and Ottawa.
“We don’t know why there weren’t any offers,” said Pasquariello. “Rio Canada is aware that third parties are interested in entering into new or amended subleases.”
Pasquariello says the appointment of FTI Consulting Canada as receiver will “maximize recoveries for the benefit” of the properties.
