Hudson’s Bay Co.’s efforts to sell 25 of its leases to British Columbia-based billionaire Ruby Liu for about $69 million were blocked by an Ontario court, according to a court filing.
HBC signed an agreement to sell its leases to Liu in May, but the deal faced opposition from several retail owners, including Ivanhoé Cambridge Inc. and Cadillac Fairview Corp. Ltd., who doubted its business plan and ability to run the stores, and the matter was taken to court in late August.
Nearly two months later, Justice Peter Osborne of the Ontario Superior Court of Justice agreed with several of the concerns raised by the owners.
“The overall lack of experience at the leadership level represents a significant risk to the operational viability of launching and managing 25 department stores on the contemplated timeline,” it said in its 48-page decision released Friday. “The composition of the buyer’s proposed senior management team…is of great concern to me.”
HBC, Canada’s oldest retailer, which filed for bankruptcy under the Business Creditors Arrangement Act in March, is trying to repay millions of dollars to its creditors.
In addition to monetizing its leases, HBC also laid off all of its employees, sold intellectual property rights to Canadian Tire Corp. Ltd. and is still trying to auction off its artifacts.
The sale of the 25 leases to Liu could have resulted in a recovery of more than $50 million for HBC’s creditors and created about 1,800 jobs across Canada, according to a court document filed by HBC.
HBC has not responded to the Ontario court’s decision, but it is a blow to Liu, who had already organized a pair of recruiting events in July to hire workers for the proposed stores.
At the time, Liu outlined his plans to create a new set of stores under his name. These stores would dedicate about 30,000 square feet for a children’s play area, he said, and would include Asian grocery stores and Asian fusion dining areas.
It also wanted to open seven to eight “platinum stores” that would have focused on an “immersive shopping experience” to attract younger shoppers.
“In two or three years, we will see new Ruby Liu stores in Canada,” he said at the time. “If we are successful, in five years we will go to other countries in North America and the rest of the world. We are planning to build 30 stores around the world if we are successful.”
Lawyers representing the owners said in August that their plan was “doomed to fail.”
A lawyer told the court that it was much less detrimental to landlords and other tenants in a shopping center to have an empty space than to have an “inappropriate and inadequate anchor tenant.”
• Email: nkarim@postmedia.com
