Hudson's Bay liquidation of all stores could start as soon as Tuesday

A full liquidation plan at Canada's oldest company could begin as soon as Tuesday and last for up to 12 weeks, but Hudson's Bay is still holding out hope that it will find a lifeline.

Lawyers for the beleaguered retailer said in an Ontario court Monday morning that if approved by the judge, the liquidation would span 80 stores as well as three Saks Fifth Avenue stores and 13 Saks Off 5th locations in Canada that it owns through a licensing agreement.

The process Hudson's Bay is proposing would allow the retailer to remove some stores from the liquidation, should it find sufficient financing during the 10 to 12 weeks when lawyer Ashley Taylor expects the company to offload its inventory.

"A quick start will maximize the value of the business ... and preserve whatever chance there is of a restructuring," Taylor told Ontario Superior Court Judge Peter Osborne in a hearing at a Toronto courtroom Monday.

The hearing attracted so many lawyers, media and other observers that an overflow room had to be opened to facilitate spectators there to learn what will come of the retailer dating back to 1670, when the country was involved with the fur trade.

The hearing was meant to advance a creditor protection case Hudson's Bay launched March 7, when it admitted it was struggling with financial difficulties amid subdued consumer spending, Canada-U.S. trade tensions and post-pandemic drops in downtown store traffic.

It said the situation has become so bad that it deferred some payments to landlords, service providers and vendors and was days away from not being able to meet payroll obligations.

As it struggled, a landlord "unlawfully locked" Hudson's Bay out of a store located in Sydney, N.S., and a team of bailiffs attempted to seize merchandise from a location it runs in Toronto, Ont., mall Sherway Gardens, said Jennifer Bewley, the chief financial officer for Hudson's Bay's parent company, in a court filing.

When the company filed for creditor protection, Hudson's Bay lawyer Taylor said the retailer's plan was to restructure by liquidating half its stores and monetizing some of the leases it tends to hold in prime, high-traffic spaces.

That plan was to be carried out under debtor-in-possession financing, which lenders make available to troubled companies in order to help them restructure.

In the run-up to the March 7 court hearing, Taylor said the company had two lenders interested in supplying that funding. But three hours before, the financing from its chosen suitor "fell apart" and the retailer "scrambled" to get an alternative together.

That alternative came in the form of $16 million in funding commitments from U.S.-based investment management firm Restore Capital and other lenders, expanded to $23 million soon after.

Despite the boost, the commitments weren't enough to satisfy all of Hudson's Bay's needs, forcing the company to "double" its efforts to find more cash, Taylor said.

It's since reached out to at least 19 potential lenders and major landlords who could offer rent concessions.