HUDSON’S BAY COMPANY, A 355-YEAR-OLD BUSINESS, FILES TO RESTRUCTURE

Hudson’s Bay Company, the Canadian entity that comprises the retailer Hudson’s Bay and TheBay.com, has announced that it will pursue the Companies’ Creditors Arrangement Act (CCAA), a Canadian law that helps financially troubled companies avoid bankruptcy. It allows companies to restructure their finances and avoid foreclosure or asset seizure.

According to a conflicting story on Baystreet.ca, “Hudson’s Bay, the Canadian department store chain that has been a growing concern since 1670, has filed for bankruptcy. The oldest retail business in Canada has filed for protection from its creditors amid mounting debt and says that it intends to restructure its business. The company, which literally began life buying beaver pelts from fur trappers, has struggled with declining foot traffic and sales at its stores since the Covid-19 pandemic struck in 2020.”

According to a press release issued late Friday evening by Hudson’s Bay Company, LLC:

After careful consideration of all reasonably available alternatives, the decision to seek protection under the CCAA was made in consultation with Hudson’s Bay’s legal and financial advisors. Among other things, the Initial Order provides for a stay of proceedings in favor of Hudson’s Bay and its subsidiaries for an initial period of 10 days, subject to extension thereafter as the Court deems appropriate. The stay of proceedings is also extended to Hudson’s Bay’s real estate joint venture with RioCan.

Restore Capital, LLC, an affiliate of Hilco Global, together with other lenders, has committed to provide interim debtor-in-possession financing to finance Hudson’s Bay’s operations in the lead up to the “comeback motion” hearing, with a CAD$16 million advance that was approved on Friday. Hudson’s Bay will seek additional financing to fund its operations during the CCAA proceedings.

“Hudson’s Bay has been a vital retailer to Canadians for generations, and this decision was made with the best interests of our customers, associates and partners in mind,” said Liz Rodbell, President and CEO of Hudson’s Bay. “While very difficult, this is a necessary step to strengthen our foundation and ensure that we remain a significant part of Canada’s retail landscape, despite the sector-wide challenges that have forced other retailers to exit the market. Now more than ever, it is critical that Canadian businesses are protected and positioned to succeed.”

Ms. Rodbell added, “Earlier this year, we worked with potential investors to refinance a portion of our credit facilities to improve our liquidity and support our business plan. However, the threat and realization of a trade war has created significant market uncertainty and has impacted our ability to complete these transactions.”

The company is exploring strategic alternatives and engaging stakeholders to explore potential solutions to preserve and strengthen its business. While no assurances can be provided, these discussions reflect Hudson’s Bay’s commitment to preserving jobs and community ties where possible.

Ms. Rodbell added, “Hudson’s Bay remains deeply connected to Canada and is focused on the future. Our goal is to re-establish our foothold and ensure the company’s long-term place in the evolving Canadian retail market. As we go through this process, we will continue to show up for our customers and communities, as we always have.”

Like many retailers, Hudson’s Bay has been navigating significant macroeconomic and industry-wide pressures, including:

• Trade and Financing Uncertainty: Ongoing trade tensions with the U.S., including the new and wide-ranging tariffs on exports to the U.S., together with retaliatory tariffs imposed by Canada on U.S. imports, have created economic uncertainty, directly impacting refinancing efforts and limiting access to the capital needed to support the business.
• Post-Pandemic Shifts: Marked shifts in Canada’s corporate culture resulting from work-from-home policies has created a permanent and drastic population reduction in downtown stores. This, among other long-lasting impacts of pandemic-related challenges, has put significant pressure on the retail sector.
• Economic Headwinds: Rising costs of living, higher mortgage rates, and a weakening Canadian dollar have strained household budgets, leading to subdued discretionary consumer spending and broader economic challenges.

The CCAA process will allow Hudson’s Bay to restructure its operations, streamline costs, and refocus on its core strengths. Through a license agreement, Hudson’s Bay Company ULC has a small footprint of Canadian Saks Fifth Avenue and Canadian Saks OFF 5TH stores. These stores will also continue to operate.

The CCAA proceedings do not affect U.S.-Saks Global, which is a standalone entity distinct from Hudson’s Bay Company ULC.