Manitoba businesses owed $2.2M by Hudson's Bay, but 'we probably won't see a cent': contractor

Sandi Waterfield says she had an inkling the Hudson's Bay Company was in financial trouble after the historic retailer failed to pay $30,000 to her small Manitoba business for over a year.

Waterfield is the general manager and part owner of Klondike Sterling Glove Corp., one of the 2,000 creditors the Hudson's Bay Company has struggled to pay while buckling under the nearly $1 billion debt it owes them.

She says she did not receive any notification before the national retailer announced on March 7 it had applied for creditor protection, just hours after a reporting system — where she could find out how much of the inventory she had consigned to the retailer had been sold — shut down.

Now, "if I go to log into it, it comes up 'user inactive,'" said Waterfield. "The only warning I had was that they weren't paying."

Waterfield said her Winnipeg-based outerwear company has been in business with the Bay for over 25 years. The retailer represented 40 per cent of her business last year, with 20,000 units of product, she said.

"Hudson Bay is my largest customer, my single largest customer, and at its peak, it represented about 70 per cent of my volume," said Waterfield.

When the retailer filed for creditor protection earlier this month, it hoped to restructure by liquidating half of its stores and monetizing some of the leases it holds in areas of prime foot traffic, according to a lawyer for the company.

However, it was unable to secure the funding from lenders needed to finance that restructuring, leaving the company scrambling and facing a full liquidation of all of its 80 stores.

The deeply indebted company owes $950 million to secured and unsecured creditors, including $2.2 million to dozens of Manitoba companies, according to a creditor document.

In a Toronto court on Wednesday, Ashley Taylor, a lawyer for Hudson's Bay, requested an extension on the formal approval of the liquidation plan until Friday, saying that the company was still engaging with stakeholders and having "good, constructive discussions."

'It'll affect all Canadians in some way'

Marissa Freed, president of Freed and Freed International, says her family has been doing business with Hudson's Bay for over 100 years, beginning with her great-grandfather.

Freed and Freed International does the design and the development for the Bay's Stripes line — merchandise that features the more than 350-year-old company's famous stripes — and made some of the first blanket coats for the retailer back in the 1970s, she said.

"It's the only remaining national department store in Canada, and I think it'll affect all Canadians in some way, shape or form because of that," said Freed.

According to the creditor list, Freed and Freed International Ltd. is owed $12,295. Freed said that number is inaccurate, but she declined to say how much the company is owed.

She also said she isn't sure if any financial losses will be recouped.

Ryan Smith, general manager of Standard Electrical Contractors, says the Hudson's Bay Company hasn't paid for around $24,000 of electrical work done by his St. Andrews-based company, which he said has been a contractor at three Bay locations in Winnipeg over the past 25 years.

"We basically stopped doing any work there just because we knew that we probably wouldn't be paid," Smith said.

After seeing the public list of creditors, he thinks it's "very unlikely that we'll see anything," he said.

"Looking at all the totals of all the other companies that are owed money, I'm fairly certain that we probably won't see a cent."

The Bay racked up its highest bills in Manitoba in transportation and space rental, including more than $969,000 owed to TransX, according to the creditors document.

The company owes nearly $521,000 to OPB Realty, the landlord for its St. Vital mall location, $520,784. Among Manitoba suppliers, the largest bill owed by the Bay is $213,926 owed to Winnipeg's Crown Cap (1987) Ltd., which makes headwear.

 Smith said while it's unfortunate, the Bay's closing may be a sign of things to come.

"Unfortunately, we'll be seeing … more stories and things of this nature in the next few years," he said.

Waterfield said she's not sure how Klondike Sterling Glove could replace the lost business from the Bay, especially given the uncertainty around U.S. tariffs, which "will have a very large impact for me," she said.

"I don't know what kind of growth I'm going to get out of that marketplace, so I may have to look offshore to Europe and overseas to see if there's any opportunities," said Waterfield.

"And if there isn't, then I'll probably close my doors."