Bay workers may not see money in creditor protection case: lawyer

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TORONTO — A court appearance from Hudson’s Bay is raising doubts over how much money the faltering retailer will have left for employees after liquidation.

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The Superior Court of Justice heard arguments Thursday about which law firm should represent the retailer’s past and present employees during proceedings in the retailer’s creditor protection case, before appointing retired judge Herman Wilton-Siegel to play the role.

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In urging judge Peter Osborne to appoint a law firm Hudson’s Bay suggested, the company’s lawyer Elizabeth Pillon said, “there may not be recoveries to this group, so we need to make sure we keep this as streamlined as possible.”

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Pillon argued the court should name firm Ursel Phillips Fellows Hopkinson LLP to represent the employees, noting it has been involved in notable insolvency cases including for defunct retailers Sears Canada and Nordstrom Canada.

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The statement raises a painful prospect for the 9,364 employees and many retirees Hudson’s Bay had when it filed for creditor protection last month. Hundreds have since lost their jobs with no severance offered and many others have been notified of an end to some payments and benefits they got from their employer.

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In typical insolvency proceedings, secured lenders such as banks are first in line for repayment, with other creditors including employees much lower down.

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Hudson’s Bay filed for creditor protection lost month, citing significant difficulties paying its bills because of the effects of the COVID-19 pandemic, an intensifying trade war and a drop in downtown traffic.

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It began liquidating all but six stores and hunting for investors or buyers to keep the company alive. In a court submission made Wednesday, a financial advisor for the business, known as Canada’s oldest company, said there was a “low probability” of that happening, so the retailer plans to liquidate the remaining six stores beginning Friday.

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Andrew Hatnay, a lawyer with Koskie Minksy said when Hudson’s Bay first appeared in court in March, it was “in dire straits,” with just $3 million in its bank account.

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Meanwhile, his firm was being flooded with calls, some from employees he had represented in a previous case involving Hudson’s Bay and others who were new to him. Many worked in Bay stores, but others had warehouse or executive jobs.

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They told Hatnay they were worried about finding their next job, having to seek unemployment insurance or losing pensions and benefits.

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The court had yet to appoint a firm to represent employees, but Hatnay said his firm didn’t want to leave workers helpless, so it appeared in court on their behalf from the start to ensure their voice was heard.

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“The legal profession often hears about … access to legal system, access to justice,” Hatnay told a judge. “We are not trying to sound sanctimonious, but this is what this case is for us.”

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As the creditor protection process advanced, 420 workers retained Hatnay’s firm.

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Hudson’s Bay simultaneously started to formalize the process of who would represent workers. It reached out to fix firms asking them to submit proposals to represent employees, Pillon said. Five were interested and made formal pitches