An Ontario court has extended Hudson’s Bay’s reprieve from the hundreds of businesses it owes money until the end of July.
Judge Peter Osborne granted Canada’s oldest company permission Tuesday to extend the court’s protection from creditors under the Companies’ Creditors Arrangement Act to July 31 rather than ending May 15.
Hudson’s Bay lawyer Ashley Taylor argued the extension was necessary for the ongoing process of finding buyers for the business and its assets, as well as takers for its leases.
“We are asking for an extension so we can have some breathing room to see what can be done,” he told Osborne.
The extension request came as Hudson’s Bay appears to be hurtling toward a new future.
After filing for creditor protection in March because it was having trouble paying 26 pages’ worth of landlords, vendors and suppliers the almost $1 billion they were collectively owed, the department store chain put itself, its assets and its leases up for sale.
Seventeen bidders have since made offers for the entire business or treasures like its intellectual property. Twelve are vying for 39 leases.
Taylor said Hudson’s Bay and the firms helping it choose bidders are “not yet in the position to bring forward transactions for approval,” but an extension will bring it closer to that spot.
It will also see the company through to the end of liquidation sales spanning all 80 Bay stores and 16 Saks locations in Canada. The sales are expected to wrap by the end of May, with the Bay and Saks to vacate all of its properties by the end of June.
Proceeds from the sales have so far exceeded Hudson’s Bay’s expectations.
Between March 8 and 14, the company made $21 million, beating its own estimates by about $7.4 million and allowing it to return some last-minute financing it received from Restore Capital to keep it afloat, court documents show.
Between April 19 and May 2, sales surpassed $129 million, about $36.8 million more than the company initially forecast, the documents showed.
Because the liquidation process has “generated significant cashflow” that is “in excess” of what the Bay needs to operate, Taylor asked the court Tuesday for permission to repay as much as $165 million to its senior lenders, Bank of America and Restore Capital LLC.
Under that plan, the first of that money—about $46 million—would flow to Restore around May 23 and $24.6 million will be sent to Bank of America.
The distributions faced opposition from lawyers for several landlords.
One of them was Joseph Pasquariello, who represents RioCan Real Estate Investment Trust, which runs several properties with Hudson’s Bay through a joint venture.
Pasquariello called the move to dole out the cash as “very hurried.”
“There has not been one sale, one transfer of a lease put before this court for an approval,” he said in asking for distributions to be delayed to later in the process.
However, Osborne decided to side with Hudson’s Bay, saying “distribution is appropriate.”
