Longtime local retailer Hudson’s Bay has filed for creditor protection, pointing to low store traffic post-pandemic, US-Canada trade issues, and limited consumer spending.
The Canadian Press reported that the filing was made to the Ontario Superior Court of Justice recently. The department store intends to undergo restructuring as well.
Hudson’s Bay president and CEO Liz Rodbell said in a statement published by The Canadian Press that the move was “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 said.
She added that tensions with the US impacted the company’s negotiations with potential investors to bolster liquidity. As a result of tariff threats and implementation, there was “significant market uncertainty” that scuppered the closure of possible deals.
Following the COVID-19 pandemic, Hudson’s Bay closed branches and laid off several employees. In a court-filed affidavit, Jennifer Bewley, the chief financial officer of Hudson’s Bay's parent company, revealed that the company was struggling to pay landlords, service providers, and vendors. It had also deferred some payments for months.
Without further funding in a matter of days, Hudson’s Bay would not be able to pay its 9,364 employees, according to Bewley.
“Without the benefit of court protection, failure by Hudson's Bay to pay rent at its stores will result in a rapidly escalating chain of events, leading to lease defaults,” Bewley said in a statement published by The Canadian Press.
Months before the filing, the Hudson’s Bay store in Toronto showed signs of disrepair and an oversupply of products. By contrast, competitor Simons had unveiled a $75 million expansion plan.
Hudson’s Bay indicated in its court filing that it was committed to saving jobs and was avoiding the business’ sale or closure. The retailer was first established in 1670 and has 80 retail branches.