Hudson’s Bay Company ULC, the Canadian department store operator, announced on Friday it has filed for creditor protection with a Canadian court, and revealed plans to restructure its business.
Hudson’s Bay
The Toronto-based retailer said it has commenced proceedings under the Companies’ Creditors Arrangement Act (CCAA) pursuant to an initial order for creditor protection from the Ontario Superior Court of Justice.
The company said it is exploring strategic alternatives and is exploring potential solutions to strengthen its business.
Restore Capital, LLC, an affiliate of Hilco Global, together with other lenders, will 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 already approved.
Hudson’s Bay will be seeking additional financing to fund its operations during the CCAA proceedings, the company said, adding that the money enables it to keep operating for 10 days, at which time it must present a restructuring plan to the court or request an extension.
“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.
“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 attributed its financial hardships to ongoing trade tensions with the U.S., including the new tariffs on exports to the U.S.; post-pandemic shifts, including changes in Canada’s corporate culture resulting from work-from-home policies; and economic headwinds, including the rising costs of living, higher mortgage rates, and a weakening Canadian dollar.
Hudson’s Bay operates 80 stores, with store closures expected as a result of the restructuring plan. The company has a small footprint of Canadian Saks Fifth Avenue and Canadian Saks Off 5th stores, which it said will continue to operate.
Alvarez & Marsal Canada Inc. has been appointed as the monitor to oversee the CCAA proceedings.
