Hudson’s Bay Company ULC Commences CCAA Restructuring Amid Retail Industry Challenges
Hudson’s Bay Company ULC (Hudson’s Bay or the company), the Canadian entity that operates the historic Hudson’s Bay department stores and its e-commerce platform, TheBay.com, has officially commenced proceedings under the Companies’ Creditors Arrangement Act (CCAA). This strategic move, undertaken with the approval of the Ontario Superior Court of Justice (Commercial List), is intended to provide the company with creditor protection as it navigates the evolving and increasingly difficult retail landscape in Canada. As part of the restructuring process, Alvarez & Marsal Canada Inc. has been appointed as the monitor to oversee the CCAA proceedings.
The Decision to Seek CCAA Protection
After conducting a comprehensive review of all available alternatives, Hudson’s Bay, in collaboration with its legal and financial advisors, determined that filing for protection under the CCAA was the most viable option to stabilize the business. The Initial Order granted by the Court ensures a stay of proceedings for an initial 10-day period, preventing further legal actions against the company and its subsidiaries. This stay may be extended at the Court’s discretion as the restructuring process unfolds. Furthermore, the order extends protections to Hudson’s Bay’s real estate joint venture with RioCan, providing additional security as the company restructures its operations.
Securing Interim Financing for Stability
To support continued operations during this period, Hudson’s Bay has secured interim debtor-in-possession (DIP) financing from Restore Capital, LLC, an affiliate of Hilco Global, along with additional lenders. The company received approval for an initial CAD$16 million advance, with plans to seek further financing to maintain operations while navigating the restructuring process. These funds will be critical in sustaining Hudson’s Bay’s retail footprint and ensuring business continuity as management explores strategic alternatives.
Commitment to Customers, Employees, and the Future
Liz Rodbell, President and CEO of Hudson’s Bay, reaffirmed the company’s dedication to its employees, customers, and business partners, emphasizing that this decision was made with the long-term future in mind.
“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,” Rodbell stated. “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.”
Despite the company’s efforts to refinance portions of its credit facilities earlier this year to improve liquidity and support business operations, ongoing economic challenges have significantly impacted the retail sector. Rodbell pointed to the growing uncertainty surrounding trade policies and economic conditions as key factors that have influenced Hudson’s Bay’s financial situation.
The Impact of Trade, Economic, and Market Pressures
Like many retailers, Hudson’s Bay has been grappling with substantial macroeconomic and industry-wide pressures that have impacted its financial standing and operational viability. Some of the most pressing challenges include:
Trade and Financing Uncertainty
- Ongoing trade tensions with the United States, including the imposition of new and wide-ranging tariffs on exports, have created economic instability.
- Canada’s retaliatory tariffs on U.S. imports have compounded the financial strain, making it increasingly difficult for retailers to operate efficiently.
- These trade-related challenges have directly affected Hudson’s Bay’s ability to refinance debt and secure necessary capital to sustain the business.
Post-Pandemic Shifts in Consumer Behavior
- A significant cultural shift towards remote work has led to a permanent decline in foot traffic in downtown shopping districts.
- Hudson’s Bay, like other major retailers, has seen a drastic reduction in in-store sales at key urban locations, making it challenging to maintain previous levels of profitability.
- Lingering pandemic-related effects continue to disrupt supply chains and consumer spending habits.
Rising Economic Pressures
- Increasing costs of living, coupled with higher mortgage rates, have reduced disposable income for many Canadian consumers.
- A weakening Canadian dollar has made imported goods more expensive, driving up costs for retailers and limiting their ability to maintain competitive pricing.
- Overall discretionary consumer spending has declined, leading to lower retail revenues across the industry.
Strategic Alternatives and Future Business Plans
While the CCAA process provides immediate relief, Hudson’s Bay is actively exploring long-term strategic alternatives. Management is engaging with stakeholders to evaluate potential solutions that will preserve the company’s business operations, maintain jobs, and strengthen community ties. Although no guarantees can be made at this stage, the company remains committed to finding a path forward that ensures its sustainability in the evolving retail environment.
“Hudson’s Bay remains deeply connected to Canada and is focused on the future,” said Rodbell. “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.”
Continuing Retail Operations
Despite the restructuring, Hudson’s Bay remains operational, with both physical stores and TheBay.com continuing to serve customers. Through a licensing agreement, Hudson’s Bay Company ULC maintains a small portfolio of Canadian Saks Fifth Avenue and Canadian Saks OFF 5TH stores, which will also remain open throughout the proceedings. The company assures customers that they can continue to shop as usual while Hudson’s Bay works through its restructuring plan.
CCAA Proceedings and Its Impact on Saks Global
It is important to note that the CCAA proceedings solely impact Hudson’s Bay Company ULC and do not extend to Saks Global, which is a distinct entity with separate ownership and financial structure. As such, Saks Global’s operations remain unaffected by the restructuring, and it will continue business as usual.
Hudson’s Bay’s Path to Recovery
Hudson’s Bay’s decision to initiate restructuring under the CCAA underscores the severe pressures facing the Canadian retail sector. The company remains hopeful that, with the right strategic adjustments and financial support, it can emerge stronger and more resilient. By leveraging its rich history, brand recognition, and deep-rooted connections to Canadian communities, Hudson’s Bay aims to rebuild and position itself for long-term success in an increasingly competitive and rapidly changing retail landscape.
As the proceedings progress, stakeholders—including creditors, employees, and customers—will be closely watching to see how Hudson’s Bay navigates this complex restructuring process. The company has committed to transparent communication and will provide updates as significant developments arise.
Hudson’s Bay has weathered many challenges throughout its long history, and while this period presents one of its greatest tests, its leadership remains determined to secure a viable future for the brand. The next steps will be critical in shaping Hudson’s Bay’s role in Canada’s retail industry in the years to come.
