Hudson’s Bay Sale Using Special Protocol to Manage Insider Bid: Report

A recent document distributed to lawyers involved in Hudson’s Bay’s creditor protection case is causing speculation that a company insider may be considering a bid for the retailer’s assets or leases.

The document, known as the “Insider Protocol,” was sent to lawyers on Thursday and obtained by The Canadian Press. It outlines how processes designed to assist the struggling retailer in finding investors or buyers will now include new provisions to ensure “integrity and fairness.”

The protocol has been put in place “in light of a potential insider bid that may involve certain members of management,” although the individuals involved are not named.

This protocol follows a requirement for company insiders, including members of the leadership team, who are contemplating a bid for assets or leases to disclose their interest to the court-appointed organizations overseeing the sales processes by the previous Monday.

As of now, no members of Hudson’s Bay, Saks Fifth Avenue, or Saks Off 5th have publicly declared their interest in the business. The document also states that there are no guarantees that a bid will ultimately be made.

“Hudson’s Bay Company has no comment on the sale process at this time,” the retailer stated. “To clarify, no Insider Bid has been identified or confirmed, and these protocols are procedural protections that are standard in any similar process.”

The firms overseeing the sales process – Alvarez & Marsal, Oberfeld Snowcap, and Reflect Advisors – have not responded immediately to a request for comment on the document, or confirmed if an insider has shown interest in making a bid.

It is common for such a protocol to be implemented in sales processes for companies under creditor protection, but its introduction also suggests that someone involved in managing Hudson’s Bay or Saks may be interested in investing in the businesses or purchasing their assets.

The 355-year-old company, Canada’s oldest business, put its assets and leases up for sale after filing for creditor protection last month. The decision was made due to weak consumer spending, trade tensions between Canada and the U.S., and reduced foot traffic in downtown stores post-pandemic.

As part of this process, the company is liquidating and closing 74 Bay stores, along with 13 Saks Off 5th and two Saks Fifth Avenue locations in Canada held by Hudson’s Bay through a licensing agreement.

The new protocol governing the sale of assets and leases stipulates that insiders considering a bid must provide Alvarez & Marsal with a list of staff possibly associated with their offer, and update this list as needed. These staff members must seek approval from Alvarez & Marsal before engaging in discussions with potential bidders.

The monitor must also authorize any communications between internal bidders, landlords, and licensees of the Bay’s brands and intellectual property.

Management of Hudson’s Bay involved in these talks will not receive exclusive access to sale or lease information that is not shared with all other involved parties. This restricted information includes the identities of other potential bidders.

Binding bids for the company’s assets or business investments are due by April 30, while offers for the leases must be submitted by May 1.

Subsequently, bids will be evaluated by Hudson’s Bay, Alvarez & Marsal, Oberfeld Snowcap, and Reflect Advisors. In the event of multiple interested parties, assets may be auctioned off.

All sales must receive approval from the Ontario Superior Court. Approval for the overall asset sales process must be sought by May 30. If leases are not bid on or terminated, they must be disclaimed by July 15.