A significant step toward financial relief has been granted to former employees of Hudson’s Bay as an Ontario court approved a $5 million plan aimed at covering the loss of long-term disability and other benefits for those affected by the retailer’s abrupt closure. The decision follows extensive negotiations involving over 9,300 workers who were laid off when the historic department store chain went out of business last year.
Court Approval for Hardship Funds
During a recent court hearing, Ontario Superior Court Justice Jessica Kimmel endorsed the plan that will establish “hardship funds” designed to support the most vulnerable former employees. This will include lump-sum payments intended to compensate for the long-term disability benefits that would have been accessible had the company remained operational. The decision comes after months of discussions aimed at securing some level of financial assistance for those who have faced significant hardship since the market exit of Hudson’s Bay.
Hudson’s Bay was granted creditor protection in March 2025, amid escalating losses that left the company with a staggering $1.1 billion in debt. The retailer, a staple of Canadian retail for over three centuries, ceased all operations in June when it failed to devise a viable restructuring plan.
The Impact on Employees
The plight of former employees has been dire, particularly for those on long-term disability, many of whom faced the loss of essential benefits due to the company’s financial troubles. Initially, nearly 190 individuals were informed that their disability payments would be terminated. However, following legal negotiations, these payments were temporarily extended until a resolution could be reached.
Under the newly approved plan, former employees will receive lump-sum payments intended to cover the disability benefits they were entitled to, either until May 2028 or until they reach the age of 65, depending on their circumstances. Currently, approximately 160 individuals continue to depend on these benefits, with many classified as permanently disabled and unable to secure alternative employment.
In addition to disability payouts, the plan incorporates provisions for ex-employees experiencing “extraordinary hardship,” allowing them to apply for one-time payments of up to £9,600 each. There is also potential for additional discretionary funds to assist with medical or other urgent expenses.
The Aftermath of Hudson’s Bay Closure
The closure of Hudson’s Bay has had a far-reaching impact on the Canadian workforce, with thousands losing their jobs and associated benefits. The company, which has transitioned to operating as a numbered entity following the sale of its brand and intellectual property to Canadian Tire Corporation, is now in the process of winding down its operations. Once a prominent retailer, Hudson’s Bay now employs a mere eight staff members.
Former employees were not afforded severance packages upon their layoffs, and they have also lost health, dental, and life insurance benefits. Many have turned to the government for support under the Wage Earner Protection Program (WEPP), which provides a maximum payment of £8,844.22 to individuals impacted by a company’s insolvency. Additionally, some former executives have seen their pension payments cut, prompting a class-action lawsuit concerning entitlements to surplus funds within a larger pension plan covering numerous employees.
Why it Matters
The approval of this relief plan is a crucial lifeline for the former employees of Hudson’s Bay, highlighting the broader implications of corporate insolvency on workers’ lives. With many facing financial uncertainty and health-related challenges, this initiative not only offers immediate support but also underscores the importance of safeguarding employee benefits in future corporate structures. As the retail landscape continues to evolve, the lessons learned from the Hudson’s Bay closure may catalyse changes in how businesses protect their workforce during turbulent times.
