Hudson’s Bay is expected to return to court on Thursday morning to seek approval for the appointment of counsel to represent its thousands of employees and the auction of its art collection including the royal charter granted by King Charles II.
Both motions could be contested by parties — such as some of the retailer’s current and former employees — who have expressed dissenting opinions to the court in their submissions.
The future of the 355-year-old retailer is growing increasingly bleak.
On Wednesday, the retailer’s financial adviser, Reflect Advisors, said in a court affidavit that the retailer has decided to liquidate all of its stores beginning Friday, including the six it previously wanted to keep operational, because it believes it is “unlikely” to find a restructuring solution to save its business.
“The exclusion of the six stores from the liquidation sale is negatively impacting the applicants’ realization efforts,” said Adam Zalev, managing director of Reflect, adding that there’s a “low probability of receiving a viable bid based on the six-store model.”
As Canada’s oldest company anticipates mass layoffs as a result of store closures, it is applying to the court to appoint Ursel Phillips Fellows Hopkinson LLP as legal counsel from among five law firms that submitted proposals to represent its current and former non-union employees.
However, Koskie Minsky LLP, which has been retained by about 400 non-union employees and retirees, has filed a cross-motion to dismiss the retailer’s motion. The law firm was the only one to appear in court last month to defend the workers at five previous hearings and argued it had been acting as “de facto” counsel for Hudson’s Bay employees and retirees.
Our clients “do not trust the company to select another firm and have HBC’s selection imposed on them against their wishes,” Andrew Hatnay, a partner at Koskie Minsky, said in a letter to the court.
The law firm wrote in another factum to the court that Hudson’s Bay’s selection of employee counsel is a “disguised attempt to displace KM, a firm that HBC does not like. KM has had adversarial litigation against HBC in the past.”
Koskie Minsky is expected to apply to the court on Thursday to allow a former associate chief justice of the Superior Court of Justice to act as an independent third party to decide which law firm will be appointed as staff counsel. If this is not approved, it would apply to the court to serve as counsel for all Hudson’s Bay non-union employees and retirees.
The cross-motion is backed by Gowling WLG, the law firm that served as counsel to six former Hudson’s Bay executives participating in the Supplemental Executive Retirement Plan, which was wound up last month.
While Hudson’s Bay is also seeking permission to auction off its collection of 1,700 pieces of art and more than 2,700 artifacts through a sale run by Heffel Gallery Limited, governments and Indigenous communities have expressed their concerns and emphasized the public’s interest in safeguarding the art collection.
“Selling these items at auction without full transparency and consultation with impacted First Nations would not only be morally irresponsible but also represent a continuation of the colonial dispossession of First Nations’ lands and belongings that the HBC directly profited from for centuries,” wrote Kyra Wilson, the grand chief of the Assembly of Manitoba Chiefs, in a letter to Hudson’s Bay on April 22.
Since March 21, Hudson’s Bay has kicked off the lease monetization process and sales and investment solicitation process (SISP) in parallel, seeking to scout for parties interested in bidding for the leases of the company’s enormous retail footprint and its other assets, such as its owned stores and trademarks.
Eighteen parties have expressed interest in a total of 65 individual leases, while 36 Hudson’s Bay leases drew no interest. Among them, multiple parties interested in the leases would also bid in the SISP, the court document read.
The company is clinging to the faint hope that a successful bid will come through the SISP, and if so, Hudson’s Bay reserves the right to withdraw stores from liquidation sales.
The Star first reported that Weihong Liu, a B.C. billionaire and chairwoman of shopping centre owner-operator Central Walk, said she wants to buy “dozens” of stores on Chinese social media.
The deadline to submit a bid in the SISP is April 30.
