Hudson’s Bay Co. to seek court approval to liquidate stores
Hudson’s Bay Co. may be forced to close all of its stores and will begin liquidation sales as early as next week.
Canada’s oldest retailer announced late on Friday that “despite exhaustive efforts,” the company has been able to secure only limited financing “that will require the full liquidation of the entire business,” encompassing 80 department stores across Canada.
The Globe and Mail first reported earlier this week that Hudson’s Bay was working on a restructuring plan that could keep roughly half of the stores open, if it could secure financial assistance from its landlords.
Possible concessions could include waiving the rent on stores for a period of time and financial contributions from those landlords to keep locations open.
But the company has been unable to reach arrangements that would support such a plan. Discussions with landlords were still continuing late Friday, according to a source with knowledge of the matter. The Globe is not naming the source because they were not authorized to speak publicly about the discussions.
“The company remains hopeful that key stakeholders, particularly its landlord partners, will engage to explore a viable alternative restructuring path that could preserve jobs, tenancy in retail locations, and a company with deep historic significance before it is too late,” said a press release from Hudson’s Bay, issued late Friday.
“This alternative would necessitate significant capital and immediate and substantial cooperation from landlords and other critical partners.”
Last week, Hudson’s Bay was granted court protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA). A court hearing is scheduled for this coming Monday, where the company will ask for an extension of the CCAA proceedings and will seek court approval to begin liquidating stores.
At the time of the initial filing, Hudson’s Bay had secured $16-million in initial debtor-in-possession (DIP) financing, a type of loan designed to allow companies to continue operating while undergoing a restructuring process. However, the retailer has been unable to secure sufficient additional DIP financing to support a restructuring plan that would include keeping stores open.
“Our team has worked incredibly hard to identify a viable path forward, and our resolve is strengthened by the overwhelming support from customers and associates who have shared heartfelt stories about Hudson’s Bay and what our stores have meant to them, their families, and their communities across the generations,” Liz Rodbell, president and chief executive officer of Hudson’s Bay, wrote in Friday’s press release. “These powerful experiences remind us why we must continue to pursue every possible opportunity to secure the necessary support from key landlords and other stakeholders to save The Bay.”
Hudson’s Bay stores, as well as the Saks Fifth Avenue and Saks Off 5th stores that the company operates in Canada under a license from Saks Global, will remain open during liquidation sales. E-commerce site TheBay.com will keep operating “for a limited time,” according to the release.
Assuming the company receives court approval for the liquidations, it will share further details about the process in the coming days, the release said.
This article was first reported by The Globe and Mail
