Canada’s Hudson’s Bay restructuring, exploring alternatives
North America’s oldest retail chain has filed for creditor protection and is restructuring its business, citing trade tensions with the U.S., economic headwinds and post-pandemic consumer shifts.
Hudson’s Bay Company, which includes Hudson’s Bay and TheBay.com and, through a license agreement, a small footprint of Canadian Saks Fifth Avenue and Canadian Saks Off 5th stores, said it has started proceedings under the Companies’ Creditors Arrangement Act (CCAA) pursuant to an initial order for creditor protection from the Ontario Superior Court of Justice. The move is akin to a Chapter 11 bankruptcy filing in the U.S.
The proceedings do not affect U.S.-Saks Global, which is a standalone entity distinct from Hudson’s Bay Co. (Previously, Hudson’s Bay, Saks Fifth Avenue and Saks Off 5th were part of HBC, a holding company. But the holding company has disbanded after HBC purchased the Neiman Marcus Group and formed Saks Global, which includes Saks, Neiman Marcus, Bergdorf Goodman and Saks Off 5th.)
[READ MORE: Saks Global finalizes $2.7B purchase of Neiman Marcus]
“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 Co. “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.”
Rodbell added that, earlier this year, the company worked with potential investors to refinance a portion of its credit facilities to improve its liquidity and support its 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,” she said.
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, the retailer said in a statement.
As part of the filing, the company said it is exploring strategic alternatives and engaging stakeholders to explore potential solutions to preserve and strengthen its business.
“Our goal is to re-establish our foothold and ensure the company’s long-term place in the evolving Canadian retail market,” said Rodbell.
Restore Capital, 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 approved earlier today. Hudson’s Bay will be seeking additional financing to fund its operations during the CCAA proceedings.
Hudson’s Bay was founded some 350 years ago.
