Court approves relief for disabled and other vulnerable employees and former employees in major insolvency
March 27, 2026
The Ontario Superior Court of Justice has approved a negotiated framework addressing the termination of employer-funded long-term disability benefits and employee hardship following Hudson’s Bay’s insolvency
Following Hudson’s Bay being granted creditor protection under the Companies’ Creditors Arrangement Act (“CCAA”), the company terminated the employment of nearly all employees and advised 188 disabled employees and former employees that their long-term disability (“LTD”) benefits would end. This group had been receiving LTD benefits that were funded through the company’s general revenues. The vast majority were determined to be completely disabled from performing any occupation.
Employee Representative Counsel (“ERC”) brought a motion seeking approval of a Hardship Programs Term Sheet designed to address the loss of LTD benefits and other extraordinary employee hardship. The negotiated framework included the following three components:
- A trust program to extend and settle future claims for LTD benefits for 157 former employees whose LTD benefits would otherwise have terminated;
- A replacement policy to continue and settle LTD benefits for one individual who was not eligible to receive benefits under the trust program; and,
- An employee hardship program to provide an avenue for former employees and retirees facing extraordinary hardship to obtain some relief, provided certain conditions and eligibility requirements are met.
The Term Sheet was negotiated over an extended period of time. The Hudson’s Bay and the Monitor supported the ERC’s motion, and there was no opposition from any Secured Lenders.
In approving the Term Sheet, Justice Kimmel held that the negotiated framework (1) was fair and reasonable in that it moves the CCAA proceedings towards a successful compromise, (2) benefitted stakeholders generally by avoiding litigation that would be costly, time consuming and uncertain, and (3) was consistent with the purpose and spirit of the CCAA.
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