An Ontario court on Thursday rejected Hudson’s Bay’s bid to appoint a law firm of its choosing to represent thousands of current and former employees, but signed off on the embattled retailer’s bid to auction its extensive art collection.
Hudson’s Bay had wanted to appoint Ursel Phillips Fellows Hopkinson LLP as legal counsel for its current and former employees and retirees.
The company was chosen from five firms that had submitted written proposals to the beleaguered Canadian retailer.
Andrew Hatnay of Koskie Minsky LLP, already representing more than 400 Hudson’s Bay employees, argued that having the retailer choose counsel to represent workers against the company was “flawed.”
Koskie Minsky was the only firm to appear in court last month to defend some of the workers and retirees at five previous hearings.
Hatnay suggested the appointment of retired Superior Court justice Douglas Cunningham to act as an independent third party to decide on counsel for the employees.
The motion was 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.
Elizabeth Pillon, a lawyer representing Hudson’s Bay, had argued that the retailer did not need a third party to make that decision and asserted Koskie Minsky’s objection stemmed from not being selected among the five firms.
Justice Peter Osborne agreed with Hatnay, but has instead appointed Justice Herman J. Wilton-Siegel to evaluate proposals and choose a law firm that can represent the more than 9,000 Hudson’s Bay employees facing layoffs, and thousands of the retailer’s retired workers.
“I agree with the applicants and the (court-appointed) monitor that one representative counsel firm can adequately represent the interests of all and indeed current clients of that firm,” said Osborne. “I am not prepared today to appoint a specific firm as representative counsel.”
The 355-year-old retailer was also seeking court approval to auction off its extensive art collection of 1,700 pieces of art and more than 2,700 artifacts.
Governments and Indigenous communities have expressed their concerns and emphasized the public’s interest in safeguarding the art collection. The sale is to be run by Heffel Gallery Limited.
The trove includes a royal charter granted by King Charles II in 1670 for the founding of the fur-trading business and granting Hudson’s Bay vast land rights and sweeping control over trade and Indigenous relations for decades.
Osborne granted the retailer permission to auction its art collection separately from its ongoing sales process and instructed the company to return to court with a proposed auction procedure after consulting the relevant parties concerned about the cultural and historical significance of the artifacts.
Hudson’s Bay has received several letters of objection to the sale of some of its art collection, including one from Kyra Wilson, Grand Chief of the Assembly of Manitoba Chiefs, who called for a halt on the sale of items with links to First Nations people.
Alvarez & Marsal Canada, the court-appointed monitor guiding Hudson’s Bay through its creditor protection, said on Thursday it has agreed to provide the catalogue of art pieces to all interested parties, including the Manitoba Chiefs, ahead of any auction.
“Nothing will be sold or transferred before those discussions and consultations take place,” said a Hudson’s Bay lawyer Maria Konyukhova.
The future of Canada’s oldest company 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.”
Since March 21, 18 parties have expressed interest in 65 individual Hudson’s Bay leases, while 36 leases drew no interest at all.
The company is clinging to the faint hope that a successful bid will come through for some of its stores and trademarks. It that happens, Hudson’s Bay said it reserves the right to withdraw stores from liquidation sales.
On Chinese social media, Weihong Liu, a B.C. billionaire and owner of several shopping centres, said she wants to buy “dozens” of Hudson’s Bay’s stores.
The deadline to submit bids for stores and intellectual property is April 30.
