Hudson's Bay: the executive pension trusts and the November 2005 line

On November 10, 2005, Hudson's Bay Company received an offer for all of its outstanding common shares, which under the company's supplementary executive retirement plan was a change in control, per the Affidavit of Rita De Fazio, July 17, 2026, para. 19. A change in control obliged the company to secure the supplementary pensions its executives had earned up to that day. It did so on or about January 6, 2006, wiring $24,984,329 to Royal Trust Corporation of Canada as trustee of a new retirement compensation arrangement. What the executives earned after that date never went into the trust: the company called it the "unfunded" portion and paid it from current revenues, through RBC Investor Services as its paying agent, per the Affidavit of Susannah B. Roth, Feb. 10, 2026, paras. 40, 45–46, 68, 125–126.

Both streams stopped after the CCAA filing on March 7, 2025. By a letter dated March 26, 2025, HBC told Royal Trust it had terminated all of the plans and that no further payments or benefits under any of them would be made or funded by the company, per the Affidavit of Susannah B. Roth, Feb. 10, 2026, para. 103. Nothing has been paid from any of the company's four executive retirement trusts since April 2025, per the Affidavit of Rita De Fazio, July 17, 2026, para. 25. On September 18, 2026, the monitor, Alvarez & Marsal Canada Inc., filed its Eighteenth Report supporting an order that would make the 2005 date the line deciding who shares in the 2006 trust, the HBC Main RCA, per the Eighteenth Report of the Monitor, Sept. 18, 2026, paras. 1.18, 3.10.

What remains of the estate

When it filed, Hudson's Bay described itself as the oldest company in North America, founded in 1670 with a grant of sole trade over Rupert's Land, and ran 80 Hudson's Bay stores, three Saks Fifth Avenue stores and 13 Saks OFF 5TH stores across Canada with approximately 9,364 employees, per the Affidavit of Jennifer Bewley, Mar. 7, 2025, paras. 7, 44, 102. By July 2026 the monitor could put the rest of the case in a sentence: "Aside from the remaining issues with respect to the Pension Plan and the Royal Trust Motion, the Applicants' wind-up has largely been completed." The company closed the five weeks to July 17, 2026 with approximately $15.9 million in cash; the principal still owed to the FILO lenders, excluding any make-whole, was approximately $29.5 million, per the Seventeenth Report of the Monitor, July 22, 2026, paras. 3.12, 5.4–5.5.

On July 27, Justice Kimmel granted a Transition Order giving the monitor enhanced powers over the applicants, whose directors intended to resign. A year earlier the applicants had opposed a FILO Agent motion for similar relief, which Justice Osborne dismissed; this time they agreed, and no one opposed. At Justice Kimmel's prompting, the draft's clause providing that the monitor is not, for purposes of the Income Tax Act, a legal representative or a person to whom s. 150(3) applies was reworded in light of One Bloor West Toronto Group (The One) Inc. (Re), 2026 ONSC 1854, per the Endorsement of Justice Kimmel (Transition Order), July 28, 2026, paras. 1, 3–4, 10, 16, 18.

Four trusts and no one to read the plans

Royal Trust holds four retirement compensation arrangements for the company's former executives. Counting cash in trust and the refundable tax the Canada Revenue Agency holds for each, their balances at October 31, 2025 were:

Of the Main RCA's balance, $24,262,165.43 was refundable tax at the CRA rather than cash in trust, and that tax comes back at $1 for every $2 of benefits paid out, per the Affidavit of Susannah B. Roth, Feb. 10, 2026, paras. 3, 37.

The trust agreements treat the insolvency as terminating the plans and contemplate payout within 60 days. On April 11, 2025, by Royal Trust's account, the company said it would not retain an actuary, pay wind-up fees or contribute further. Royal Trust engaged Mercer (Canada) Limited itself on May 5, 2025, and Mercer raised questions about the plan documents that, in the ordinary course, the company would have answered as plan administrator, a role HBC had renounced. "HBC's insolvency and relinquishment of its role as administrator of each SERP has created a ministerial vacuum," Susannah B. Roth, a consultant to Royal Trust, deposes. Mercer has told the trustee it does not expect enough in the trusts to pay every participant's benefits in full, per the Affidavit of Susannah B. Roth, Feb. 10, 2026, paras. 17–19, 23, 106, 108, 111.

Royal Trust moved on February 13, 2026 for advice and directions on twelve questions and took no position on any of them. By the monitor's count some 305 people participate in the plans, many in more than one. On June 26 Justice Kimmel split the motion: questions 1 to 8, 10 and 11, on which Employee Representative Counsel and the company expected to agree, were set down for a half-day hearing before Justice Steele on September 25, and the rest were left for later, per the Eighteenth Report of the Monitor, Sept. 18, 2026, paras. 1.4–1.9, 3.3, App. "B".

The line at November 10, 2005

The plan and the trust do not say the same thing. Read plainly, Royal Trust's affiant says, the plan calculates each participant's termination liability on all benefits accrued up to termination, with no mention of 2005, per the Affidavit of Susannah B. Roth, Feb. 10, 2026, paras. 127–128. Employee Representative Counsel reads art. 7.04 of the plan as giving every defined-benefit participant, on its face, a pro rata share of the trust. The trust agreement's recitals, however, say it was settled to secure benefits accrued to the 2005 change in control, and its art. 9.1.1 provides that where the two documents conflict, the trust agreement prevails, per the Eighteenth Report of the Monitor, Sept. 18, 2026, paras. 3.11–3.13.

Employee Representative Counsel, Ursel Phillips Fellows Hopkinson LLP, and the company agree on the trust agreement's reading, and support it with the company's own conduct: the "funded" and "unfunded" labels in its communications to executives, the separate payments from the trust and from the company's own account, and a 2022 Mercer valuation that valued the funded portion on pre-2005 service alone, per the Factum of the Employee Representative Counsel, July 24, 2026, paras. 39, 52, 54–55.

By the De Fazio affidavit's count, of 257 participants in the plan's defined-benefit component, 183 accrued benefits up to November 10, 2005 and would share in the trust, 141 of them only for the pre-2005 part of their service; 74 accrued benefits only on or after that date and would have no entitlement to the trust's assets. The 2022 valuation, as the affidavit reproduces it, put the funded defined-benefit component at $57,589,000 in trust, including the two executives' separate trust, against a shortfall of $6,208,000; the unfunded component had no trust assets and a shortfall of $115,615,000. Participation was a term of employment for designated executives, who were not permitted to contribute. The 29 participants in the defined-contribution component would take nothing from the trust either; no money was ever paid into an account for them, and their claims, the affidavit says, are unsecured debts "for which no recovery is expected," per the Affidavit of Rita De Fazio, July 17, 2026, paras. 22–23, 40–44, 50.