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The properties that are dedicated to retail chains like Eaton and The Bay is known to be difficult to fill with another tenant
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Published on March 19, 2025 • Last updated 10 minutes ago • Read 5 minutes
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A broken mannequin and empty area in Hudson's Bay on the Masonville Place in London, Ontario, on Tuesday March 18, 2025. Photo by Derek Ruttan/London Free press/post media files
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Hudsons Bay Co. Ulcs is threatening liquidation is Hap Stephen, the experienced restructuring manager who has held a number of top -class companies through such difficulties, including the last heyday of another Iconic Canadian retailer, T. Eaton Co. Ltd., better than Eaton's Hadnit.
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“I'm not surprised,” he said less than a minute in a call to talk about what went wrong with HBC and what is next. “This is a repetition of what I went through at Eaton.”
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First came the court, which submitted protection against creditors as part of the company's Corporate Agreement Act, and then the liquidation process that is to begin in Hudson's Bay as soon as the court monitors the procedure for protecting creditors. This decision could have come on Wednesday afternoon, but the judge has now given the respective parties until Friday to agree.
In the late nineties, Stephen had a look at Eaton's collapse, first as a restructuring expert and as a Chief Financial Officer of the company, who tried to navigate difficulties that followed the initial restructuring and public share offer. The final stumbling in creditor protection came two years after the first when a deal that was taken up by a retail chain in the United States.
Eaton's creditors took a haircut in liquidation, but a handful of business survived thanks to the retail rival Sears Co., which they bought and largely kept them open to record the advantages of accrued tax losses at Eaton, said Stephen.
“The landlords were part of the creditor group and they were glad that Sears continued to do business for those (locations),” he said.
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Stephen said Hudsons Bay found a similar solution to some of his 96 Bay, Saks Fifth Avenue and Saks by Fifth Stores, very unlikely.
The tax belief game, which has led to taking over some of the failed Eaton business, could only work for HBC if it could find a willing buyer in the same sector, which has been increasingly moving online about 25 years after Eaton's death. Sears Canada himself submitted creditor protection in 2017 and all Canadian shops were closed until 2018.
“I don't see who could serve the business,” said Stephen. “They could not take them over and make them a cinema and use the tax loss.”
He also forecasts not much success in finding tenants to take over the rental contracts and sub -rental in shopping centers and shopping centers across the country.
“We looked at what we could do with the real estate, and there wasn't much what they could really do,” he said, remembering the business locations of the Eaton, which were not adopted by Sears.
The properties that devote themselves to retail chains such as Eaton and The Bay, which sometimes prove more than a level, is notoriously difficult to fill with another tenant, especially if the landlord has restrictions on the type of business that can be a tenant, said Stephen. Sometimes these restrictions are to avoid competition with other shops in the shopping center or in the shopping center.
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“You … have to adapt to everything that is in your lease with the landlord,” he said. “How much … you could use, that's not there? It's a really difficult problem.”
HBC court files state that some of his rental contracts are below the market value, which indicates that they could be worth if another tenant would accept them. Jones Lang Lasalle Real Estate Services Inc. was maintained by the approval of HBC to help the battered retailer market the business and the sales center.
However, Stephen said that “Anker” tenants can receive a significant discount on leasing prices because they bring the buyers to the shopping center and benefit other tenants. It is unlikely that a landlord will expand such favorable conditions to a new tenant, in particular one of a chosen purchase bath. Instead, the landlord could simply wait for the process and start fresh with another company.
“If … the bay pays the landlord, the landlord takes over the property,” he said. “This is (back then) and there is no rental agreement, so he could do everything he wants.”
Some bankruptcies play well for creditors when there are real estate in the mix of real estate, but Stephen, who also supervised the process at Steelmakers Essar Steel Algoma Inc. and Stelco Inc., as well as athletes' World Ltd. And Cangest Global Communications Corp., he doesn't see that for HBC.
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On the one hand, the company houses a large part of its real estate in a separately financed company in the United States, which was founded at the end of last year.
“You took out a lot from the real estate,” he said. “It wouldn't help the Canadian operations.”
The newly founded US company Saks Global, which includes the shops of Saks, Bergdorf Goodman and Neiman Marcus in the USA, is not part of the Canadian judicial proceedings.
A press release in December, when HBC closed the acquisition of the Neiman Marcus luxury department store, Saks Global said “flagship real estate with a gross assets sports folio of $ 7 billion in luxury markets”.
It described the now independent Canadian company as the possession or leasing of a real estate portfolio worth 2 billion US dollars, with some of them in a joint venture with Riocan Real Estate Investment Trust.
Court requests state that there are 12 “owners” and “main lease bodies” in the HBC Riocan-Joint. The business for these properties in cities, including Montreal and the greater Toronto area, are rented out or rented by joint venture or its subsidiaries.
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The submissions state that HBC has a number of landlords outside the joint venture, including the real estate subsidiary of some of the largest pension of Canada: Cadillac Fairview Corp. Ltd.; Omers ownership in Oxford Properties Group; And the Caisse de Dépôt et Placement du Québecs Ivanhoé Cambridge Inc.
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Stephen said the court files show that some of the Canadian real estate of HBC are in debt and second mortgages in some cases. Therefore, he is not convinced that the real estate stocks will shake out the creditors of Canadian operations well. He is more hopeful about relaxation from the liquidation sale of clothing and other goods.
“You could recover pretty well if things go well,” he said. “(In) the liquidation of Eatons … the creditors went well; much better than most of the bankruptcies.”
• e -Mail: bhecter@nationalpost.com
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