In a dramatic turn of events, Hudson's Bay Co. may begin liquidation sales as early as this Tuesday due to the ongoing financial turmoil that the once-thriving retailer is facing. During a court hearing in Toronto, a lawyer for the company revealed that if a buyer or necessary financing isn't secured by the end of May or early June, the retailer will have no choice but to proceed with liquidating its assets.

Proposed Liquidation Strategy

The proposed liquidation strategy involves selling off inventory and fixtures from Hudson's Bay's 80 department stores, four distribution centers, as well as several Saks Fifth Avenue and Saks Off Fifth stores in Canada. If approved, the liquidation sales are expected to last for approximately 10 to 12 weeks.

Efforts to Keep Some Stores Open

Hudson's Bay is actively looking for opportunities to keep some stores operational. If they manage to secure sufficient capital, certain locations might be spared from the liquidation process. Lawyer Ashley Taylor discussed the urgency of obtaining additional funding, emphasizing the need to explore all possible avenues to stabilize the business.

Court Protection Under CCAA

On March 7, Hudson's Bay sought court protection under the Companies’ Creditors Arrangement Act (CCAA), which allows struggling companies to restructure their debt while attempting to stay afloat. Initially, the company aimed to keep around 40 stores open, contingent on landlords agreeing to waive rent payments temporarily. However, recent discussions with landlords have yielded little success, pushing Hudson's Bay closer to full liquidation.

Financing Challenges and Current Situation

Despite securing limited financing—initially $16 million, now expanded to $23 million—the funds are insufficient for a restructuring plan that would keep the business operational. Instead, these funds would only facilitate store liquidations.

The financing challenges began back in February when Hudson's Bay sought debtor-in-possession (DIP) financing to maintain operations during its restructuring. Unfortunately, a critical DIP financing agreement collapsed mere hours before the CCAA filing, complicating the situation further.

Current Interim Financing