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Hudson’s Bay Co. wants to appoint a legal representative and create a “hardship fund” to support its employees, as Canada’s oldest department store gradually closes its shops and lays off more workers in the coming weeks as it tries to pay back about $1 billion to its creditors.
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The company, which employs more than 9,000 people, has sent termination letters to 272 corporate employees and anticipates further reductions, it said in a court document dated April 17.
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Most employees won’t receive severance payments, but workers may get money through the federal Wage Earner Protection Program Act or if HBC manages to recover a “sufficient” amount of money to pay back its unsecured creditors, the document said.
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To “alleviate some of the difficulties associated with the termination of certain benefits,” HBC is in talks with a two lenders to start a hardship fund that can provide financial assistance to its current and former employees, it said.
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HBC is also seeking court approval to appoint Toronto-based law firm Ursel Phillips Fellows Hopkinson LLP as a legal representative to support the interests of both its current and former employees, which would “contribute to overall cost savings” and streamlining by “serving as a single point of contact” between employees, HBC and the court, the company said.
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Hiring a legal representative for employees during complicated restructurings is a common practice. HBC’s proposed law firm has previously represented workers at Nordstrom Canada, Sears Canada Inc. and Air Canada.
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“Ursel Phillips Fellows Hopkinson LLP has extensive experience representing large groups of employees and former employees in matters involving employment-based claims,” HBC chief financial officer Jennifer Bewley said in the court document.
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HBC is also trying to get its proposal to sell its artifacts through a separate auction approved.
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The company’s collection has more than 1,700 pieces of art and more than 2,700 artifacts that “reflect the rich heritage and cultural legacy of the company,” it said. Among them is the Royal Charter, a document that gave the company exclusive trading rights over a portion of Canada in 1670.
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A separate auction would make the sale of the art collection more transparent and help ensure that “all laws and regulations in respect of Canadian heritage and cultural property are adhered to,” Adam Zalev, cofounder of Reflect Advisors LLC, HBC’s financial adviser, said in the court document.
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Several parties, such as government institutions, museums, universities and high-net-worth individuals, have expressed interest in HBC’s art collection, he said. Some have also asked that the art collection be made available for public viewing in a museum or other public institution. The auction is expected to take place before June 30.
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Even so, some historians and analysts are concerned that Canadian organizations may not be able to afford these culturally significant artifacts and that they may end up going abroad.
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