A Hudson's Bay department store is shown at Sherway Gardens in Toronto on Thursday, March 9, 2023. THE CANADIAN PRESS/Nathan Denette
Toronto – Hudson’s Bay, the retail giant, is battling for survival as it seeks court approval to begin liquidating its stores. The company, which has been struggling with financial difficulties, hopes to start the process as early as Tuesday. However, an Ontario Superior Court judge has delayed the decision to weigh all arguments before making a ruling.
The retailer’s legal team presented its case before Judge Peter Osborne on Monday, requesting permission to liquidate all 80 of its stores, along with three Saks Fifth Avenue locations and 13 Saks Off 5th stores in Canada. The company holds these under a licensing agreement.
A Race Against Time
Hudson’s Bay hopes to secure financing during the proposed 10 to 12-week liquidation period. The retailer plans to exclude certain stores from the selloff if it manages to obtain the necessary funds. However, with no concrete financial lifeline in sight, time is running out.
Judge Osborne acknowledged the complexity of the situation and postponed his ruling. “It has been a lengthy day, to put it mildly, and it is going to be a longer night as well,” he stated before adjourning.
The case has drawn significant public and legal attention, with so many attendees that an overflow room had to be opened for spectators.
Financial Troubles and Store Closures
Hudson’s Bay filed for creditor protection on March 7, admitting severe financial strain caused by weak consumer spending, Canada-U.S. trade tensions, and declining foot traffic in post-pandemic downtown areas. The situation has deteriorated to the point where the retailer had to defer payments to landlords, service providers, and vendors. Payroll obligations were also at risk.
The company reported incidents of store closures initiated by landlords, including one in Sydney, N.S., where it was "unlawfully locked out." In another case, bailiffs attempted to seize merchandise from its Sherway Gardens location in Toronto.
Initially, Hudson’s Bay planned to restructure by closing half of its stores while monetizing valuable lease agreements. This plan relied on debtor-in-possession financing, a form of funding provided to struggling companies. However, at the last moment before its March 7 court hearing, a key financial backer withdrew, forcing the retailer to scramble for an alternative.
A Desperate Search for Funding
The company managed to secure $16 million in emergency funding from U.S.-based Restore Capital and other lenders, later increasing the amount to $23 million. However, this was insufficient to cover its needs, leaving liquidation as the only viable option unless additional financing emerges.
Since then, Hudson’s Bay has reached out to 19 potential lenders and key landlords for rent concessions, but efforts have failed so far.
Judge Weighs the Consequences of Hudson’s Bay Business Liquidation
Judge Osborne expressed concerns about approving liquidation before all restructuring options were explored. He warned against selling off the company’s assets too quickly, saying, “I want to make sure we haven’t sold the jewels in the crown … making a better outcome impossible.”
If the liquidation proceeds, it will impact the entire company, including its four distribution centers. Ontario will be the hardest hit, with 32 locations and the majority of employees. Other affected provinces include B.C. (16 stores), Alberta and Quebec (13 each), and Manitoba, Nova Scotia, and Saskatchewan (two per province). Saks Fifth Avenue and Saks Off 5th locations will also be affected nationwide.
Employees Face Uncertainty
Andrew Hatnay, a lawyer representing Hudson’s Bay employees, argued against an immediate liquidation, requesting a one-week delay. He warned that once the process begins, it will trigger a consumer rush to buy inventory, leaving the company with no way to recover.
“Once liquidation starts, it becomes a self-fulfilling prophecy,” Hatnay said. “Allowing this to start virtually instantly seals the fate of the business.”
Adding to the concerns, Hudson’s Bay plans to stop accepting gift cards after April 6. It has already paused its loyalty program, affecting over 8.2 million customers who collectively hold $58.5 million in now-useless points.
After the hearing, Hatnay expressed cautious optimism, believing there is still a chance for restructuring. However, he admitted the judge faces a tough decision. “Osborne is known for being a fast worker and understands the urgency,” he said, expecting a ruling soon.
Exploring Potential Buyers
Hudson’s Bay is also seeking court approval to launch a sale process for some or all of its assets. Potential buyers could bid on store leases or even the brand’s iconic trademarks, including its famous striped branding.
Despite ongoing financial struggles, the retailer is determined to secure funding. Lawyer Ashley Taylor assured the court that Hudson’s Bay will “cast the net as wide as possible” to find financial backing.
A Challenging Road Ahead
Retail experts are skeptical about Hudson’s Bay’s chances of survival in its current form. Luxury retail consultant Lanita Layton believes the company’s best hope lies in downsizing to a more manageable number of stores.
“Hudson’s Bay needs to align with today’s consumer demands—unique product mixes, immersive shopping experiences, and top-tier customer service,” she said.
For now, the fate of one of Canada’s most historic retailers remains uncertain. The court’s next decision will determine whether Hudson’s Bay can find a path to survival—or if its 350-year legacy is nearing its end.
