BC billionaire Ruby Liu loses court battle to take over Hudson’s Bay properties
A B.C. billionaire who fought to move into former Hudson’s Bay properties over the summer suffered defeat in an Ontario Superior Court ruling on Friday.
Judge Peter Osborne ruled that the demolished retailer’s landlords would not be forced to accept Ruby Liu as a tenant.
In her decision, Osborn said she had “significant concerns” about Liu’s ability to meet the terms of the leases she wanted.
HBC declined to comment on their decision, while a spokesperson for Liu did not immediately respond to messages from The Canadian Press. Both sides have the ability to appeal the decision, although neither has announced plans to do so.
Major landlords including Cadillac Fairview, Oxford Properties and Ivanhoe Cambridge were opposed to Liu’s purchase of 25 former Hudson’s Bay leases for $69.1 million.
Osborne’s decision was months in the making and came after reading 25,600 pages of arguments from commercial landlords and investors.
In March itself, Hudson’s Bay, saddled with $1.1 billion in debt, had applied for creditor protection. Finding no buyers, it subsequently liquidated its 80 stores and 16 more stores from Saks, and then turned its attention to its leases, intellectual property, and assets such as art.
The lease-bidding process received a dozen bids for 39 properties. YM Inc., which owns mall brands such as Bluenotes, picked up five brands for $5.03 million. A homeowner picked one up for $20,000.
But the biggest bid came from Liu, who dreamed of opening a new department store chain in his name. To accomplish this feat she wanted 28 leases and in May, Bay announced that she was willing to sell them to her.
Three of them easily obtained court approval because they were on properties in BC Malls – Woodgrove Centre, Mayfair Shopping Center and Tsawwassen Mills – owned by Liu.
Ruby Liu, a billionaire with a big vision, now has legal permission to take over the leases on three former Hudson’s Bay department stores located in three malls she already owns. For more on the new Bay beneficiary, we’re joined by retail analyst Carl Boutet.
The remaining 25 became one of the most disputed issues in the Gulf closure. Almost as soon as Bay announced that he would sell the lease to Liu for $69.1 million, the landlord met with him and brought a number of objections.
Most said they found him unprepared. He said he had no business plan, and he had a team of inexperienced executives who had spent time as real estate agents and early childhood teachers rather than retail leaders. Furthermore, she said that Liu’s plans for dining, entertainment and recreation were not permitted under the leases she wanted to take out.
When Liu prepared a business plan, it was estimated that she could renovate at least 20 of her stores – where Gulf had left them – and be operating within 180 days of signing the lease.
The landlords thought the deadline could not be achieved and argued that their $400 million budget for the project – money which they doubted was readily available since their mall had incurred $19 million in debt over the previous two years – would not be enough.
Liu, who made his fortune in Chinese real estate before immigrating to Canada, maintained his three malls prove he has what it takes. She argued that the landlord was fighting her because she is an “outsider” and not their preferred tenant.
Lenders Bay and Pathlight Capital, which recovered the most from Liu’s deal, said the landlords objected because they wanted their properties back. If they get control of them again, they can lease out their most coveted spaces to tenants of their choosing – and charge far above below-market rents in bay leases, some of which last for decades.
BC billionaire Ruby Liu is hoping to expand her mall empire by taking over the lease on 28 former Hudson Bay retail space. In her first interview with English-language media in Canada, she joined CBC’s Gloria Macarenko with a translator to share her vision for the department store.
The retrofitting of properties would also allow landlords to break up spaces into multiple smaller units for use by multiple tenants or redevelop them into mixed-use or residential spaces.
In making his decision, Osborne had to consider section 11.3 of the Companies’ Creditors Arrangement Act, which allows the court to assign a lease to a prospective tenant against the landlord’s objections.
The section asked them to consider whether Liu is a “suitable” buyer who would be able to meet the lease obligations and whether his deal has the support of a monitor, a court-appointed, independent third party that regularly reviews the bay’s lender protections.
Monitor Alvarez and Marsal said it felt Liu could meet all her financial obligations, but also said there was a “very real risk” that she would not be able to succeed in the “important” task because she was inexperienced and unprepared.
