asked an Ontario court Wednesday to approve a restructuring agreement that will give it a short timeline to save the six stores it has so far spared from liquidation.
A new version of the agreement will force the retailer to start liquidating those stores on April 8, if it hasn’t found a likely transaction that will repay some of what it owes its senior secured lenders Bank of America, Pathlight Capital and Restore Capital by April 7 — three days after the deadline it originally asked for.
Ashley Taylor, a lawyer for ܻDz’s, told Ontario Superior Court judge Peter Osborne the agreement wasn’t “a very satisfying outcome.”
It wasn’t exactly what the department store wanted either, he reasoned, but was the best arrangement it could find.
“The company wanted more stores. The company wanted more time. The company wanted more latitude,” Taylor said.
ܻDz’s’s request for approval on the restructuring agreement comes as the bulk of its 80 stores, 13 Saks Off Fifth locations and three Saks Fifth Avenue shops entered liquidation sales this week.
Last week, strong sales allowed the company to temporarily save its Toronto flagship location on Yonge Street, a store in the city’s Yorkdale mall and another at Hillcrest Mall in Richmond Hill, Ont. The remaining three survivors are located in the downtown Montreal area, Carrefour Laval mall and Pointe-Claire, Que.
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The liquidation happening at the remainder of Hudson’s Bay’s stores is part of a creditor protection case the company began in early March, when it said it was facing financial difficulties that were so significant they threatened the company’s ability to continue operating.
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Hudson’s Bay closures leave brands in search of new home for selling inventory
Some parties involved in the court proceedings are opposing Hudson’s Bay request to approve the restructuring support agreement.
One of those parties is RioCan Real Estate Investment Trust, which has a joint venture with Hudson’s Bay that sees them own or co-own 12 properties together.
A motion it has filed argues the proposed restructuring agreement’s early April deadline is at odds with another process the court approved Friday to facilitate a search for potential investors or buyers for portions of the business.
That exercise, known as the sale and investment solicitation process, asks potential buyers interested in owning some of the company to place bids by April 30, a motion filed by RioCan lawyers Robert Chadwick, Joseph Pasquariello and Andrew Harmes says.
Because the timelines conflict, RioCan’s lawyers say approval of the restructuring agreement would “limit any chance HBC has” of finding a way forward.
“HBC and its stakeholders deserve the benefit of the opportunity to explore all reasonable opportunities to find a restructuring solution that maximizes value compared to a forced liquidation,” the RioCan lawyers say.
Lawyers for Pathlight Capital disagreed with the landlord.
They said in a written submission that “giving effect to the landlords’ objections would serve to effectively prefer unsecured landlords’ interests to those of the interests of the company’s secured creditors.”
Secured lenders like Pathlight have collateral that backs or “secures” the loan, which allows them to take ܻDz’s assets to cover unpaid debt. Unsecured lenders do not have this safety net.
Linc Rogers, a lawyer for Restore Capital, also took issue with the landlord’s stance.
He pointed out every one of ܻDz’s landlords was offered a chance to give the company rent concessions or provide financing to help the company avoid its current situation, but all of them declined to help.
“We found a way forward to avoid chaos,” he said in court, arguing the restructuring agreement should move forward.
Rogers’ oral submission was interrupted when several of the more than 200 users viewing the court proceedings over Zoom broadcast sexually explicit videos. The judge quickly ordered the stream shut down.
When the hearing reconvened after a break to find a way to stream proceedings while minimizing the chance of another disturbance, Osborne apologized to those in attendance for being subjected to the “unfortunate disruption.”
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