Hudson’s Bay lender asks court to end lease deal with mall owner Ruby Liu
Hudson’s Bay, one of Canada’s oldest department store chains, is facing backlash from one of its biggest lenders, Restore Capital LLC. The lender is alleging that the retailer has mishandled its liquidation process to such an extent that a court intervention is necessary. Restore Capital LLC is seeking to halt a lease transaction between Hudson’s Bay and B.C. billionaire Ruby Liu, as well as appoint a “super monitor” to oversee the remainder of the company’s asset liquidation.
The motion filed by Restore Capital LLC highlights the lender’s concerns about the retailer’s handling of its financial affairs. Restore Capital LLC has been a long-time lender to Hudson’s Bay, providing a significant amount of funding to the company. However, since the retailer filed for creditor protection, Restore Capital LLC claims that Hudson’s Bay has failed to effectively manage its assets, resulting in a loss of collateral for the lender.
The crux of the issue lies in a lease transaction between Hudson’s Bay and Ruby Liu, a B.C. billionaire. While a court has approved a $6 million deal involving three leases for stores at malls owned by Liu, another deal for up to 25 additional leases in Alberta, B.C., and Ontario is still pending court approval. Landlords, including Cadillac Fairview and Oxford Properties, have expressed concerns about Liu’s lack of a practical business plan for the department stores she aims to operate on their properties.
Restore Capital LLC argues that Hudson’s Bay has incurred significant costs in pursuing the Liu deal without tangible results. The lender points out that the retailer has spent millions on rent and professional fees in connection with the transaction, with little progress to show for it. If the deal with Liu falls through, Restore and other lenders could face further financial losses.
In response to the allegations, Hudson’s Bay spokesperson Tiffany Bourré stated that the retailer would address the motion in due course. She emphasized that the company is committed to responsibly managing its assets and affairs during the liquidation process. However, Restore Capital LLC contends that Hudson’s Bay’s actions have hampered the lender’s ability to recover funds owed to them.
Restore Capital LLC is seeking court intervention to expand the powers of Alvarez and Marsal, a monitor appointed to oversee the creditor protection process, or alternatively appoint Richter Consulting Inc. as a receiver. The goal is to ensure a more prudent and effective winding down of Hudson’s Bay’s operations to protect the interests of stakeholders, including lenders like Restore Capital LLC.
Overall, the situation underscores the challenges faced by retailers in the current economic climate and the importance of effective asset management during liquidation processes.
