On March 7th 2025 Hudson's Bay Company ULC filed for CCAA protection. The retailer owns The Bay, Saks Fifth Avenue and Saks Off 5th and it appears they will liquidate 40 of 80 stores.
This was not a surprising event in the Trade Credit Insurance world. Requests for coverage on HBC, through our brokerage and many others, were monthly over the last decade. The available coverage has been very limited and expensive, and we saw this as a warning sign from insurers on the financial health of a company.
Payments from HBC since Covid-19 have been increasing dramatically, sometimes taking almost a year. Increases in payment length are a sure sign of a company in trouble. In the last couple of years it was publicly reported that real-estate holdings of the retailer had been sold off with the majority of the funds used to pay suppliers. As you can only do this once, this real estate sell off was another sign of doom.
Some suppliers knew all this information and continued to sell, knowing that one day they would not recover what was owed. Other suppliers who had all their eggs in the Bay basket will most likely have to file CCAA or BIA as well. The payment practices of Bay suppliers will be closely watched by their own suppliers as the bankruptcy domino effect takes place.
It remains to be seen what HBC will look like after emerging from CCAA. Recent history has shown that restructured retailers who can convince suppliers to give them credit eventually see their cash flow diminish with a second CCAA filing following. Given the Hudson’s Bay’s 355 year history, and its ability to reinvent its business, maybe it can buck the trend?
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