Canada’s oldest company, Hudson’s Bay, may be on the verge of gaining more time to save the six stores it has temporarily been able to rescue from liquidation.
An Ontario court has spent the last two days hearing from lawyers about a proposed restructuring that could help the beleaguered department store find a way forward, but would also put a timeline on how long it has before it will have to sell off the remaining stores.
Ontario Superior Court Judge Peter Osborne adjourned the hearing mid-morning Thursday, promising to make a decision on the agreement later that day or early the next.
When Hudson’s Bay first started floating the agreement, it came with a deadline forcing liquidation of the surviving six stores if the company had no prospect of finding a saviour.
The deadline shifted to April 7 as objections from landlords mounted. Then one of the retailer’s lenders said Thursday it would be willing to give the company until April 30.
“We don’t want to fight. We don’t want to bring a receivership application,” said Linc Rogers, a lawyer for Bay lender Pathlight Capital. “We are looking at this court and saying there is a better path forward.”
The threat of receivership — the point at which parties can no longer carry certain debt and thus must appoint a third-party receiver to sell the assets and pay bills — has been dangling over Hudson’s Bay as the creditor protection process has advanced through the court.
The company has had to defer rent and payments to vendors as traffic and sales slowed, but has so far avoided receivership by agreeing to liquidate all but six of its 80 Hudson’s Bay, 13 Saks Off Fifth and three Saks Fifth Avenue stores. The six stores that have been spared are split between the Greater Toronto and Greater Montreal areas.
The “secured” lenders — companies whose loans are backed by collateral, thus allowing them to seize Hudson’s Bay assets to cover unpaid debt — have also been appeased by the retailer’s processes to find firms to take over their leases and bid on their assets.
But landlords have argued these processes are also at odds with the restructuring agreement Hudson’s Bay has asked the court to approve, despite the retailer’s lawyer admitting the deal “was not a very satisfying outcome” because it lacks the stores, time and latitude the company desires.
Hudson’s Bay workers are speaking out after learning they will receive no severance pay as the company confirms it will pay out $3 million in bonuses to executives and managers handling the liquidation of most stores.
The landlords pointed out early…
Read More: Hudson’s Bay could potentially win more time to save 6 stores so far spared