Canada’s retail landscape is in turmoil, and industry experts warn that the downfall of major names like Hudson’s Bay and Saks Fifth Avenue Canada is only the beginning. Once symbols of retail grandeur, these companies’ recent descent into creditor protection is just part of a growing trend of financial distress. Insolvency professionals and restructuring experts report that since the COVID-19 pandemic, a steady stream of retail companies have either downsized, restructured, or shut their doors permanently, mirroring federal data that shows a sharp rise in bankruptcies and insolvencies over the last four years — reversing what had been a 25-year decline.
April 2025 alone saw 56 insolvencies and 46 bankruptcies in the retail sector. Hudson’s Bay Company, one of Canada’s most historic businesses, filed for creditor protection in March — one of four major retail collapses in the first quarter of the year. Michael Basso, a partner in business restructuring at BDO Canada, said Hudson’s Bay’s collapse “was kind of like a big flag for everyone,” signaling wider trouble in the sector. The compounding challenges facing retailers include a slow post-pandemic recovery, fluctuating consumer spending, global tariff disruptions, and inflated costs.
Dina Kovacevic, editor of Insolvency Insider, emphasized that many retailers were already on shaky ground before the pandemic and had just been surviving. “The tariffs may have been the final nail in the coffin,” she noted, but added that the crisis has been long brewing. The casualties this year alone include Montreal’s Frank and Oak, Peavey Mart, Comark Holdings Inc. (owner of Ricki’s, Cleo, and Bootlegger), Oak + Fort, and Hakim Optical — all of which have entered restructuring or creditor protection. Many cited COVID-related fallout or U.S. tariffs as triggers, but experts agree deeper structural issues in retail were at play.
A major misstep for many was how they handled the shift to online shopping. Some didn’t invest enough in e-commerce, while others leaned too far into it, eroding their physical store performance. Product mix and pricing strategy also became major stumbling blocks, as consumers turned to more affordable or better-curated alternatives. The pandemic amplified these problems, and just as retailers began adjusting their business models, new tariffs further squeezed their margins and disrupted supply chains.
To cope, some companies took on excessive debt to manage rent and operational costs — but many couldn’t keep up. Kovacevic described these firms as “zombie companies,” unable to generate sufficient revenue and reliant on continuous borrowing just to survive. Recent studies by Statistics Canada and the federal Department of Finance show Canada may now have one of the highest proportions of zombie companies in the world.
Basso added that government loans during the pandemic prolonged the lifespan of some already failing businesses, ultimately leaving them burdened with unpayable debt. “The loans helped them continue, but now they’re saddled with debt they have no ability to pay off,” he said. For many, it’s led to either bankruptcy or seeking out restructuring experts like Gordon Brothers.
Gordon Brothers, which provides appraisal, financing, and liquidation services, has played a central role in some of the sector’s efforts to stay afloat. Recently, they helped Linen Chest secure $35 million in credit, and previously offered $120 million to Toys “R” Us Canada, which has been closing locations and converting others into play centers. Gordon Brothers’ Chief Transaction Officer Kyle Shonak said the common factor among their clients is the unprecedented pace of change in business dynamics since the pandemic. “There’s no silver bullet,” he noted.
Furniture retailers in particular are struggling with overstock, having ramped up inventory during the pandemic when home improvement boomed. Now, they are turning to liquidation firms to help recover costs and restructure operations. At the same time, retailers are evaluating whether they need to adjust pricing or relocate supply chains in response to evolving tariff conditions.
Shonak noted that while companies may recover by adjusting strategies, the financial strain will inevitably be passed down. “The consumer at the end of the day is the one that pays for a lot of this stuff as it passes its way through the chain,” he said. As retail insolvencies mount, it’s clear the future of shopping in Canada will be reshaped by forces far beyond the storefront.