Hudson’s Bay is appearing before the Ontario Superior Court of Justice on Monday, where a judge is expected to decide whether the company could initiate a full liquidation immediately to avoid bankruptcy.
The oldest company in Canada is proposing to liquidate its entire business including nearly $415 million worth of inventory at all of its 96 retail stores across the country later this week if it is unable to secure additional financing. The process could last about 10 to 12 weeks, according to the company counsel.
“While the applicants remain hopeful that a restructuring solution may still be identified” to allow for continued operation, stated Hudson’s Bay in the court documents, “the only interim financing that the applicants could secure requires an immediate inventory liquidation.”
“The company’s efforts have failed,” said Hudson’s Bay counsel Ashley Taylor, after trying to seek additional financing from 19 potential lenders in the past week and negotiating with its landlords on rent payments. The retailer will “preserve any chance there is” to restructure and avoid a shutdown, he added.
The retail stores will remain open and operational until the final closing date, along with e-commerce sales, if the court approves the liquidation.
While Hudson’s Bay is preparing to close all its stores, it retains the right to remove some stores from the liquidating list if the company can secure a deal and gain permission from its debt lender.
The company, founded in 1670, was in a dire financial situation when it filed for creditor protection under the Companies’ Creditors Arrangement Action in a bid to avoid bankruptcy on March 7. As of Jan. 1, the company had only about $3 million in cash on hand, $1.13 billion in secured debt, and owed its nearly 1,900 unsecured creditors — such as brands, governments and landlords — about $450 million.
Most of the 9,000 workers employed by Hudson’s Bay and its banner retailers — Saks Fifth Avenue and Saks OFF 5TH — could face layoffs if the company goes into the liquidation phase. The company plans to retain 121 key employees during the final period before shutting down and expects to pay a cumulative $2.7 million, the court document shows.
This is a developing story.
