Hudson's Bay: at the mediator's request, the art proceeds stay in trust

On October 19, 2026, Alvarez & Marsal Canada Inc., the monitor in Hudson's Bay's proceedings under the Companies' Creditors Arrangement Act, asked to spend the art-auction proceeds it holds in trust. Since a Transition Order of July 27, 2026, it has been authorized to exercise the powers of the applicants' boards and to act for them in the proceedings, and their activities "have largely been undertaken by the Monitor," with the assistance of the applicants' remaining key employees; the forecast's payroll costs cover the "remaining five corporate employees." Its motion sought an order authorizing it to disburse approximately $5.9 million of net art proceeds, exclusive of earned interest, to the applicants "to be used to fund the ongoing costs of these CCAA Proceedings," and extending the stay to March 12, 2027, per the Nineteenth Report of the Monitor, Oct. 19, 2026, paras. 1.2–1.4, 4.2, 5.5–5.6, 8.3(b). Two days later, on October 21, it submitted a supplement. "Following service of the Monitor's motion record, the Mediator requested that the Monitor forgo seeking the CCAA Funding Relief at this time. The Monitor agreed to do so." At the hearing on October 26 it now seeks a stay to December 11, 2026, and approval of its recent reports and activities, per the Supplement to the Nineteenth Report of the Monitor, Oct. 21, 2026, paras. 1.6, 2.1. The supplement gives no reason for the mediator's request.

How the art was sold

Hudson's Bay donated most of its fur-trade-era artifacts to the Manitoba Museum in 1994. The art and artifacts that remained, according to an affidavit sworn in September 2025 by the managing director of Reflect Advisors, LLC, the company's court-approved financial advisor, relate "primarily to the Company's 'retail era'," per the Reflect Advisors affidavit, Sept. 19, 2025, paras. 1, 7. Heffel Gallery Limited sold them under auction procedures Justice Osborne approved on September 25, 2025, per the Order (Approval of Art Collection Auction Procedures), Sept. 25, 2025, para. 3. The highest hammer price at the live sale on November 19 was for a work by Winston Churchill, Marrakech, which carried a $300,000 reserve and was hammered down at $1,300,000; every item offered that day sold, for an aggregate hammer price of $4.9 million against Heffel's estimate of $1.2 million, per the Eleventh Report of the Monitor, Dec. 8, 2025, paras. 4.1–4.2, App. "A". The eighth and final online auction closed on July 2, 2026, at an aggregate hammer price of approximately $179,000. By October 19 Heffel had distributed approximately $10.1 million to the monitor, inclusive of HST and net of its commissions and fees, and the monitor reported that the process "is now complete, and the Art Collection has been monetized," per the Nineteenth Report of the Monitor, Oct. 19, 2026, paras. 3.15–3.17. The order approving the auctions had already said where that money would wait: "the net proceeds of sale of the Art Collection Auction shall be held by the Monitor pending further order of the Court or distribution to the FILO Agent," per the Order (Approval of Art Collection Auction Procedures), Sept. 25, 2025, para. 11.

Who is at the mediation

When this case was last written about here, on September 18, the subject was the company's executive retirement trusts. In July the monitor wrote that it expected the focus of the proceedings going forward to be "resolving matters related to the Pension Surplus," per the Seventeenth Report of the Monitor, July 22, 2026, para. 4.6. The plan in question is the registered Hudson's Bay Company Pension Plan, which the Financial Services Regulatory Authority of Ontario ordered wound up effective September 1, 2025. Its wind-up valuation indicates that "substantial surplus funds will remain" once all wind-up liabilities and related expenses have been paid or settled, per the Nineteenth Report of the Monitor, Oct. 19, 2026, paras. 3.6–3.8. The company has notified the plan's Independent Pension Administrator, TELUS Health (Canada) Ltd., of its intention to assert a claim to the surplus, which the applicants say "may represent a significant source of recovery for the Company's secured creditors," per the Sixteenth Report of the Monitor, June 24, 2026, para. 4.11 and the Order (Advice and Directions re: HBC Main RCA and HBC Additional RCA), Sept. 29, 2026, recitals.

Justice Kimmel made two orders on June 26. The first appointed representative counsel for the people in the plan's wind-up: Koskie Minsky LLP for the Dumai Group, persons who as of December 31, 2001 had an entitlement under the defined benefit provision of the Dumai Plan, and Ursel Phillips Fellows Hopkinson LLP for other persons with defined benefit or defined contribution entitlements under the plan, per the Pension Plan Representative Counsel Order, June 26, 2026, para. 3. The second appointed "the Retired Chief Justice Geoffrey Morawetz of Morawetz Chambers Inc." as an officer of the court and a neutral third-party mediator to assist the Surplus Mediation Parties, "being the Company, the Monitor, the Independent Pension Administrator, Pension Plan Representative Counsel, the FILO Agent and Pathlight," with the surplus negotiations, including entering into a surplus sharing agreement. The negotiations, including all communications with the mediator, are to be conducted on a confidential and without prejudice basis, per the Order (Appointing Court-Appointed Mediator), June 26, 2026, paras. 2–3, 10(a).

The direct negotiations the orders allowed for did not resolve the surplus matters in their first 60 days. The monitor then informed the mediator that it was necessary and appropriate to begin the mediation, and by October 19 written briefs had been exchanged at the mediator's instruction, "several sessions with the Mediator have taken place," and further sessions were scheduled, per the Nineteenth Report of the Monitor, Oct. 19, 2026, paras. 3.11–3.12.

What the art money was to pay for

By the monitor's account, the applicants have "largely funded the costs of these CCAA Proceedings" from receipts generated through, among other things, the liquidation of their inventory, the monetization of certain leases and the sale and investment solicitation process. DIP financing approved at the outset was repaid shortly after the amended and restated initial order of March 21, 2025, given higher-than-expected initial sales of inventory, and "no third-party post-filing funding has been utilized by the Applicants since that time." The distribution to the ABL lenders' agent authorized in May 2025 has been completed, and the applicants, with the monitor's oversight, have made various distributions and interest payments to the FILO Agent, per the Nineteenth Report of the Monitor, Oct. 19, 2026, paras. 5.1–5.2. The FILO Agent is Restore Capital, LLC, acting for various first-in, last-out secured lenders to Hudson's Bay, per the Seventeenth Report of the Monitor, July 22, 2026, para. 4.1.