Judge rejects Hudsons Bay proposal in creditor protection case [Video]

An Ontario judge rejected a Hudson’s Bay restructuring agreement Saturday evening, increasing the likelihood that lenders may seek to push the company into receivership.

In a written decision issued Saturday, Ontario Superior Court judge Peter Osborne said he declined to approve the agreement because it is “neither necessary nor appropriate at this time.”

The agreement wouldn’t have just given the embattled department store an April deadline to rescue its remaining stores but would have also handed increased power over the company’s creditor protection process to the retailer’s senior secured lenders — the Bank of America, Restore Capital and Pathlight Capital.

The agreement would have imposed a weekly budget on the business Hudson’s Bay would have regularly had to report to the lenders — companies whose loans are backed by collateral, thus allowing them to seize the retailer’s assets to cover unpaid debt.

If Hudson’s Bay reached a deal for the business with a new buyer, the agreement …