expects to let go about 90 per cent of its employees, or about 8,400 people, and close all 96 of its stores by June 1 as part of an ongoing restructuring process, according to a new court document.
Around 900 more employees are expected to be let go by June 15, the document said, with the remaining 100 or so employees assisting in winding up Canada’s oldest department store, which filed for Companies’ Creditors Arrangement Act (CCAA) on March 7.
HBC’s lawyers will return to court on June 3 to ensure the retailer’s employees can access payments under the federal Wage Earner Protection Program Act (WEPPA).
“The WEPPA permits eligible former employees to collect certain eligible wages, including termination and severance pay, owed to such former employees where the former employer is the subject of CCAA proceedings, and a court determines that the criteria prescribed by the WEPP Regulation (are) met,” the court document said.
HBC’s employees may be eligible for a maximum of $8,800.
HBC started liquidating 90 of its 96 stores in March, but had hoped to keep six open, including its flagship store in downtown Toronto, as well as two others in the Greater Toronto Area and three in the Greater Montreal Area.
That plan was scrapped, however, because it interfered with the company’s efforts to raise the roughly $1 billion it needed to pay back creditors, and
liquidation of the final stores began in April.
The 355-year-old retailer employed approximately 9,364 people across 96 stores, four distribution centres and its head office when it filed for CCAA.
The company has been looking for different ways to raise money, such as liquidating its stores, monetizing its leases, selling its intellectual property and auctioning its artifacts.
So far, HBC has inked agreements with Canadian Tire Corp. Ltd. for about $30 million and a company run by British Columbia-based billionaire Ruby Liu for its intellectual property and leases, respectively. Both agreements need to be approved by an Ontario court.
Aside from seeking approval to allow its workers to receive payments from the federal government through the WEPPA, HBC will also ask the court to approve the Canadian Tire deal on June 3.
“After careful consideration, the company’s board of directors … determined that the bid submitted by Canadian Tire was the most favourable,” the court document said. “In addition, the Canadian Tire bid will allow for the company’s iconic marks and intellectual property to be utilized by another of Canada’s iconic retailers, ensuring that an important part of the company’s legacy will continue into the future.”
The court approval of HBC’s deal with Liu is likely to take place at a later date.
A subsequent hearing is also expected to provide more details regarding a hardship fund that HBC said it was creating with the help of a couple of its lenders. The court document said the company is still “exploring the possibility” of implementing the fund to provide monetary assistance to employees who are facing hardships after the loss of their benefits.
• Email: nkarim@postmedia.com
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