Lawyers for ex-Hudson’s Bay employees ask court to approve hardship fund

TORONTO – Lawyers representing former Hudson’s Bay employees are asking a court to approve two new mechanisms meant to help staff cope with the fall of the department store.

A motion filed Wednesday by Ursel Phillips Fellows Hopkinson LLP asks the Ontario Superior Court next week to allow for the creation of a hardship fund to help ex-staff struggling with bills and approve an agreement designed to support workers receiving long-term disability benefits.

The proposed hardship fund is meant to help former HBC workers and retirees who have been having trouble covering rent, mortgages, utilities, car loans and medical expenses since the department store collapsed last year.

If the fund is approved, workers who demonstrate need could receive one-time payments of up to $9,600, and those with medical or other emergencies could be given up to $2,500 extra.

Court filings say the fund and the program for workers receiving long-term disability benefits will get cash from three sources: a Zellers health and welfare trust valued at about $9.9 million, an HBC reserve fund worth about $1.6 million and $250,000 the department store currently has on hand. 

HBC acquired discount department store Zellers in 1978 but has since sold off the rights to the name to help cover its debts.

Along with the hardship fund, the lawyers want a court to approve a lump-sum termination payment for former HBC employees who were told their long-term disability benefits were being suspended last June.

When HBC filed for creditor protection, 188 workers were receiving benefits, but since then, many have reached age 65 and are therefore ineligible for further support under the plan’s terms.

The lump sum payment now being proposed will help the remaining 158, the vast majority of which “are considered permanently disabled and have no alternative source of income other than social assistance and other public benefit programs,” court documents say.

Lawyers say the sums the ex-employees could receive will likely be enough to help many until they are 65 and will provide income security, certainty, and time to arrange their financial affairs.

“This agreement will provide significant assistance for some of the most vulnerable employees affected by this insolvency, who are unable to find alternative work because of their disability and who were otherwise facing the immediate loss of their primary source of income,” lawyer Susan Ursel said in a statement.

When Hudson’s Bay, once Canada’s oldest department store, filed for creditor protection and closed all of its locations last year, it had 9,364 employees. They worked at 96 stores under the HBC and Saks banners, at four distribution centres, and at the company’s headquarters.

Only eight employees remain with the retailer, which is still unwinding through court.

Since HBC collapsed, Ursel Phillips Fellows Hopkinson LLP says workers have faced loss of income and benefits, termination pay, severance amounts, parental leave top-ups and various other monetary perks.

This report by The Canadian Press was first published Feb. 4, 2026.