The Hudson’s Bay Company is almost $1 billion in debt, according to a court declaration that depicts a tragic portrait of the finances of a struggling Canadian department store chain.
The document was filed last week as part of a creditor protection application. The company owes nearly $950 million to nearly 2,000 unprotected creditors, including well-known apparel and beauty brands such as Adidas Canada, Estée Lauder, L’Oréal Canada, Levi Strauss Canada, Michael Kors Canada, Nike Canada and Ralph Lauren.
“This scale is monumental to bankruptcy proceedings as far as Canada is concerned. It’s a huge thing,” said Dina Kovacevic, editor-in-chief of Insider at Insider Canada. But that’s not a surprise, she said.
“The Covid pandemic is really struggling and we are really struggling with all the economic issues that are happening around the world, so it’s monumental, but I think we probably were expecting it.
The company owes more than $1 million to Canada Post and has debts in more than 12 municipalities. This list does not include the amount of debt paid to some government agencies. This believes that the submission is currently unknown. The amount paid to employees is determined for each filing.
Earlier this year, Hudson Bay only had $3 million worth of cash and cash, documents show. The $1.1 billion secured obligation includes a $724.4 million mortgage.
Protected creditors are bank-like lenders who give loans to businesses. To ensure that they are repaid, creditors assume part of the company’s assets as collateral. Unsecured creditors are usually employees and suppliers. “Unfortunately, they tend to be at the bottom of the food chain, so to speak,” Kobasevic said.
“For employees who are fired throughout the process, unfortunately, terminations and retirement benefits are unsecured claims, meaning they are likely to receive cents of dollars for those claims,” ​​she explained.
“Workers always come out last.”
Bay last week called for creditor protection, and announced its CEO pointed to the Covid-19 pandemic and the ongoing trade war with the US as an external factor putting financial pressure on the company.
Some experts say the decline in the Bay began long before the pandemic and tracked the issue with the 2008 acquisition by American investment firm NRDC Equity Partners, with the company’s new ownership prioritizing real estate over a cohesive retail strategy.
The company’s lack of investment in stores has become clear in recent years, with floors being a lack of staff, and defective HVAC systems that had led to temporary closures of escalators and elevators last summer.
“I was just before Christmas, but most of the floor was nothing stored. There was no ham from previous Christmas,” said Lawrence Archer, a Toronto resident, who leaves the bay with each hand on it.
“I feel sorry for the employees,” he added. “I’m just talking to some of them who are among them and they’re worried. Workers always come out last in this kind of situation.”
