The Hudson’s Bay Company (HBC) is on the brink of a historic transition as it navigates insolvency proceedings under the Companies’ Creditors Arrangement Act (CCAA). With mounting financial pressures, the iconic Canadian retailer is preparing for an orderly liquidation of its stores, while Jones Lang LaSalle (JLL) has been brought in to oversee the monetization of its leases across the country. The latest First Report of the Monitor, filed by Alvarez & Marsal Canada Inc. (A&M) on Sunday, outlines the grim financial reality facing HBC and the high-stakes negotiations underway to determine its future.
The Monitor’s report, dated March 16, 2025, confirms that HBC is moving forward with a full liquidation of inventory and fixed assets, including furniture, fixtures, and equipment (FF&E). The process will be handled by a consortium of retail liquidation experts: Hilco Merchant Retail Solutions ULC, Gordon Brothers Canada ULC, Tiger Asset Solutions Canada, and GA Capital Solutions Canada. The liquidation, once approved by the Ontario Superior Court of Justice (Commercial List), is expected to be completed by June 15, 2025.
Despite efforts to secure alternative financing, the only available debtor-in-possession (DIP) financing—totaling $23 million from Restore Capital LLC and partners—comes with the condition that liquidation must commence immediately. The accelerated wind-down will impact all remaining Hudson’s Bay locations across Canada, a move that will see the closure of what was once the country’s dominant department store chain.
The liquidation process includes:
- Sales at all locations to clear out inventory
- Auctioning or selling off store fixtures and equipment
- Allowing landlords to reclaim vacated premises following lease terminations
However, the report also notes that Hudson’s Bay reserves the right to remove stores from liquidation if a restructuring deal materializes. Interested parties have until May 1, 2025, to propose a viable alternative, though time is running out.
JLL’s Role in Lease Monetization
As part of the restructuring process, JLL has been engaged to oversee the sale or reassignment of leases. This is a critical element in maximizing the value of HBC’s assets, as many of its retail spaces occupy prime locations in high-traffic malls and urban centres across Canada.
Under the terms of the Lease Monetization Process, JLL will:
- Market available leases to potential buyers or tenants
- Solicit letters of intent (LOIs) by April 15, 2025
- Negotiate lease transfers and finalize agreements by May 15, 2025
- Seek court approval for successful transactions by June 17, 2025
JLL’s compensation structure includes a monthly working fee of $80,000 and a success fee of up to 10% of lease proceeds per transaction. The Monitor has endorsed the agreement, citing JLL’s expertise in retail real estate and its past involvement in analyzing HBC’s lease portfolio.
Impact on Employees and Landlords
With over 9,300 employees still on the payroll, the impending liquidation could result in one of the largest single job losses in Canadian retail history. The company has established a $3 million Key Employee Retention Plan (KERP) to ensure that critical staff remain in place throughout the transition. Notably, 78% of retained employees are store-level personnel, reinforcing the importance of maintaining operational continuity during liquidation.
Meanwhile, landlords—including RioCan Real Estate Investment Trust—are actively opposing elements of the restructuring. RioCan has filed a motion seeking unpaid rent from HBC’s joint venture (JV) leases, arguing that the retailer should not be permitted to withhold payments while liquidating assets. If successful, this could further complicate the bankruptcy proceedings and impact how lease agreements are monetized.
DIP Financing and Its Implications
HBC’s restructuring hinges on the $23 million DIP loan from Restore Capital LLC, which was approved after failed attempts to secure alternative financing. The DIP facility carries:
- Interest at CORRA + 11.5% per annum
- A 3% exit fee upon maturity
- A final maturity date of June 30, 2025
While the financing ensures immediate liquidity, it effectively ties HBC to liquidation unless a last-minute bidder emerges to salvage the business. The Monitor notes that 12 lenders were contacted pre-filing, with another seven approached post-filing, but none offered terms that would allow for continued operations beyond the current liquidation framework.
Could Hudson’s Bay Still Be Saved?
Despite the bleak outlook, there are some scenarios where Hudson’s Bay might avoid total collapse. The company’s Sale and Investment Solicitation Process (SISP) allows for binding bids on all or part of the business until April 15, 2025. If a buyer steps forward with an attractive offer, a restructuring or brand acquisition could change the trajectory of the liquidation.
Potential Buyers and Investors
- Retailers, private equity firms, or international department store operators could be interested in select Hudson’s Bay assets.
- The Hudson’s Bay brand and TheBay.com e-commerce platform remain valuable assets that might attract digital-first investors.
JLL’s Lease Monetization Could Drive Interest
- JLL’s active marketing of Hudson’s Bay’s premium retail spaces could lead to lease assignments to other large retailers, preserving some locations.
- If a buyer acquires a portion of the leases, they could keep select stores open under a new brand or ownership structure.
The Role of DIP Lenders
- While DIP lenders are focused on liquidation, they also have an interest in maximizing asset value.
- If a strong buyer emerges, DIP lenders might reconsider liquidation in favor of a structured sale or recapitalization.
What’s Next?
The next major court hearing, scheduled for tomorrow morning (March 17, 2025), will determine whether HBC’s liquidation plan and lease monetization strategy receive final approval. If granted, liquidation sales could begin immediately, with lease sales following closely behind.
For landlords, retailers, and shopping centres, the loss of Hudson’s Bay is more than just another store closure—it marks the end of an era for Canada’s oldest and most recognizable department store chain. As JLL works to repurpose prime retail spaces, the fate of Hudson’s Bay’s real estate portfolio could have lasting effects on the national retail landscape.
