Thousands of jobs are on the line as Hudson’s Bay is looking to shutter half its stores in a bid to avoid bankruptcy.
The iconic department store chain is expected to close around 40 of its 80 stores, according to a source familiar with restructuring discussions but not authorized to speak on the subject, although that number could change.
The source said the company has not yet determined which locations are on the chopping block.
The centuries-old retailer announced it had been granted creditor protection last Friday.
The company said it is struggling to pay service providers, landlords and vendors, as it also deals with the U.S. trade war and a drop in downtown foot traffic since the pandemic.
“The company has had to defer certain payments for many months,” documents filed in the Ontario Superior Court of Justice on Friday stated. “Most recently, it has been unable to pay certain critical trade creditors in the ordinary course of business, and will be unable, within the next several days, to meet its employee payroll obligations.”
The documents lay out Hudson’s Bay’s restructuring plan, which includes liquidating some retail stores, monetizing valuable leases, and reducing operations to a smaller group of retail locations.
That means thousands of workers could soon be out of a job as experts say businesses are entitled to permanently lay off staff under the Companies’ Creditors Arrangement Act (CCAA), while many might not get severance pay.
“They can claim their termination and severance pay, and they can claim their wages,” said Rich Appiah, labour lawyer and founder of Appiah Law.
“Whether they actually receive those payments is a different story,” he said, adding that other creditors usually get priority over employee claims during restructuring proceedings.
During the CCAA proceedings, employees will not be able to take legal action against the company, Appiah said.
Asked whether all Hudson’s Bay employees are still getting paid, a spokesperson for the company replied, “yes, they are.”
Its three banner retailers, Hudson’s Bay, Saks Fifth Avenue and Saks OFF 5TH, employ some 9,000 workers nationally, with more than half of them based in Ontario.
Only a fraction of those workers — 647 — are subject to collective bargaining agreements.
Jodi Nesditt, the union president of Unifor Local 240, which represents workers at Devonshire Mall in Windsor, said workers were notified about the restructuring process, but added that Hudson’s Bay did not mention store closures or layoffs.
“My concern right now is Windsor would be part of the 40 stores based on the lack of building improvements,” said Nesditt, adding that many facilities at the store, including the escalators, elevator, and heating and cooling systems in the bathrooms, are defective.
Appiah said eligible laid-off workers should apply for employment insurance, which would allow them to receive up to 55 per cent of their income for up to 45 weeks.
Affected workers could also apply to the Wage Earner Protection Program, which provides payments for employees whose company is bankrupt or subject to certain CCAA proceedings, he added.
The Hudson’s Bay spokesperson declined to comment on whether workers’ pensions are safe, but according to the court documents, the Hudson’s Bay Company Pension Plan is “sufficiently funded and is able to satisfy its liabilities.”
“What’s so terrible when companies go bankrupt, is that workers are always last. It’s the banks, places where they’ve rented, a lot of those creditors come first,” said Deena Ladd, the executive director of the Toronto Workers’ Action Centre. “Workers are the most vulnerable out of those.”
