All Hudson's Bay locations across Canada closed their doors permanently at the beginning of June.Nathan Denette/The Canadian Press
Hudson’s Bay Co. was granted court approval on Thursday to sell off six of its leases for more than $5-million, but continues to face pressure from landlords who oppose another deal that will be before the courts in late August.
Five of the former Bay stores will be taken over by YM Inc., which owns mall brands including Bluenotes and Suzy Shier. Another lease at the Metrotown shopping centre in Burnaby, B.C., will revert to the control of its landlord, Ivanhoé Cambridge.
The other lease deal that has faced significant opposition from landlords involves 25 shuttered Hudson’s Bay stores. B.C. billionaire Weihong (Ruby) Liu has offered $69.1-million for those leases, and intends to launch a chain of department stores named after herself.
There has been some movement, however: The landlord of the West Edmonton Mall has reached a deal to consent to Ms. Liu taking over the Bay lease there, and she is “very close” to reaching a consent deal with another landlord, said Ashley Taylor, a lawyer with Stikeman Elliott LLP representing Hudson’s Bay.
Ms. Liu has already acquired three former Bay leases in malls she owns in British Columbia, for $6-million.
This week, court documents revealed that Ms. Liu had been admonished by the office of the chief justice of the Ontario Superior Court for e-mailing the judge overseeing the retail bankruptcy in order to press her case for the other properties.
Her correspondence praised Justice Peter Osborne for “your grace, your dignity, your quiet but commanding presence,” and called him “a person of justice and strength.” Ms. Liu appealed to the judge to “please give me a chance.” The court deemed the letters “inappropriate” and warned Ms. Liu not to correspond with the judge directly – something Justice Osborne also urged in a previous hearing.
In court on Thursday, D.J. Miller, a lawyer for several landlords, referred to “a veritable whiplash of information that has come to light” this week.
Linda Galessiere, another lawyer representing landlords, said she was “very troubled” by the correspondence, after counsel for landlord Cadillac Fairview raised the issue.
“I too was quite surprised at the contents of the letter and the conduct behind the scenes,” she said.
The court-supervised process to sell off the leases was designed to generate money to pay back the company’s senior lenders. Facing a financial crisis, Hudson’s Bay filed for court protection from its creditors in March.
Canada’s oldest retailer initially sought investment for a plan to save a handful of its stores, but was unsuccessful. All Bay locations across the country closed their doors permanently at the beginning of June.
Inside the final days of Hudson’s Bay
A total of 62 store locations received zero bids, and those stores have now been handed back to the landlords’ control, as have four former Hudson’s Bay distribution centres.
A syndicate of the Bay’s lenders, represented by investment firm ReStore Capital LLC, has asked the court to terminate the lease deal between Hudson’s Bay and Ms. Liu, arguing that the failed retailer is burning through cash to pay professional fees and rent on those empty stores while the deal is awaiting approval – money that they say should be used to pay back the creditors.
“We have significant concerns about how that has been handled,” Brian Kolenda, a lawyer representing the lenders, said at the hearing.
The approval of the deal has been delayed, with court documents filed this week showing that Hudson’s Bay criticized Ms. Liu’s team for refusing to “take the most basic and necessary steps to advance its bid.” While court documents show that the retailer threatened to terminate the deal, this week the company filed a motion seeking its approval.
On Thursday, Hudson’s Bay was granted an extension to the court process until Oct. 31, which will allow the company to pursue the completion of the deal with Ms. Liu; to arrange an auction of a vast collection of art and artifacts owned by the company; to continue discussions of a “hardship fund” for certain employees, including those facing the end of their long-term disability benefits; and other matters.
Hudson’s Bay returns to court on Aug. 28 for a hearing into the lease deal with Ms. Liu.