B.C. mall owner Weihong Liu received court approval on Monday to take over three Hudson's Bay leases.Nathan Denette/The Canadian Press
B.C. mall owner Weihong Liu will move forward with plans to open department stores in three former Hudson’s Bay locations, after receiving court approval on Monday to take over the leases.
The three leases, for which Ms. Liu has agreed to pay $6-million, are located in the Mayfair Shopping Centre in Victoria, Tsawwassen Mills in Tsawwassen, just south of Vancouver, and the Woodgrove Centre in Nanaimo. The entrepreneur, who also goes by the name Ruby, has plans to open a chain of stores called Ruby Liu.
But Ms. Liu, the chairwoman of Nanaimo, B.C.-based real estate investment company Central Walk, still faces opposition from landlords for 23 out of 25 leases she is seeking to acquire, in addition to the three approved on Monday.
Struggling with mounting losses and $1.1-billion in debt, Hudson’s Bay was granted court protection from its creditors on March 7 under the Companies’ Creditors Arrangement Act. Canada’s oldest retailer subsequently closed all its stores across the country.
Ms. Liu submitted bids for a total of 28 leases under a court-supervised sale process. The three leases she will now acquire are located in malls that Central Walk owns. She has also made a $9.4-million deposit on her bids for the other leases, according to court documents. The sale process required deposits of no less than 10 per cent of each bidder’s offer price for the leases, suggesting Ms. Liu has offered up to $94-million for those 25 leases.
Following Monday’s hearing at the Ontario Superior Court of Justice, Ms. Liu accused the other landlords of attempting to stymie the process so that the leases would be returned to their control.
“Since the lease has value itself, therefore everybody should follow CCAA, should follow Canadian law, to register, to participate in the bidding system, the process – and you should pay for the lease, since it has value,“ Ms. Liu told reporters, speaking in Mandarin while Central Walk chief executive officer Linda Qin translated. “You cannot just hope, and sit there, hoping to get the lease back for free.”
Discussions with the other landlords are continuing as the company seeks their consent for the other deals, Maria Konyukhova, a lawyer with Stikeman Elliott LLP representing Hudson’s Bay, told the hearing.
Those deals would require court approval. In the absence of agreement from the landlords, the court could issue a “forced assignment order,” something that lawyers for a number of landlords said at the hearing they would stringently oppose.
Last week, The Globe and Mail reported that landlords were concerned, following meetings with Ms. Liu earlier this month, that she was unable to provide important information about her business plan for the stores.
According to two sources with knowledge of the meetings, Ms. Liu did not specify which vendors would supply products to the stores, and where the funding would come from for urgent and costly repairs to the spaces, among other details.
David Bish, a lawyer with Torys LLP representing mall owner Cadillac Fairview, confirmed during Monday’s hearing that the company has not received sufficient information about Ms. Liu’s plans.
“There have been, from Cadillac Fairview’s perspective, no productive discussions, no meaningful disclosure,” Mr. Bish said, calling the discussions “very troubled.”
Lawyer D.J. Miller of Thornton Grout Finnigan LLP, representing Oxford properties, said her clients “completely echo the concerns” expressed by Cadillac Fairview.
Following the hearing, Ms. Liu said she believes the landlords will support her if the court decides in her favour.
“Since everybody is mature businessmen, when the right decision comes, they will support it,” Ms. Liu said.
The process to sell off the leases for the Bay’s stores and distribution centres drew 12 bidders. No bids were received for 62 of the locations, where landlords are taking back control of the spaces.
Ms. Liu also has ambitions to expand the store network, with a particular focus on Ontario, Ms. Qin told reporters prior to the hearing. Ms. Liu said she intends to permanently relocate to Toronto and possibly move Central Walk’s head office to the city.
Ms. Liu has told landlords she wants to sell clothing and jewellery, as well as build dining spaces in the stores and host frequent events to draw in shoppers.
“The retail industry needs a newcomer, needs innovation,” Ms. Liu said.
Also on Monday, the court approved a motion by Hudson’s Bay Co. to change its name to remove any references to HBC or Hudson’s Bay. The name change is a requirement of a $30-million deal to sell its intellectual property to Canadian Tire Corp. Ltd.
That deal, which received court approval on June 3, specified the name change should occur within 45 days of the transaction closing – something that should occur on Monday or Tuesday, Ms. Konyukhova said. The company has not disclosed what the new name will be.
Editor’s note: A previous version of this article incorrectly stated that Weihong Liu's $9.4-million deposit on her bids for 25 leases suggests she has offered at least $94-million in total. Because the sale process requires deposits of no less than 10 per cent of each offer price, the deposit suggests she has offered up to $94-million.