Who knew retail leases could spark such a dramatic courtroom showdown? Hudson’s Bay is battling landlords over a massive lease sale to B.C. billionaire Ruby Liu. The stakes are incredibly high, with implications that could redefine commercial real estate. Will this groundbreaking case forever change how major retail deals are done?
A high-stakes legal confrontation is currently unfolding in a British Columbia courtroom, a dispute that pits the venerable retailer Hudson’s Bay against a consortium of powerful landlords over the sale of critical commercial leases. This landmark case is poised to establish a significant legal precedent, potentially reshaping the landscape of commercial real estate transactions and lease assignments for years to come, attracting considerable attention from across the retail industry.
At the heart of this contentious court battle is Ruby Liu, a B.C. billionaire, who Hudson’s Bay selected to acquire 28 of its leases. While three leases within malls owned by Liu have already been successfully transferred, the resistance from a who’s who of Canadian landlords is fiercely concentrated on preventing the assignment of the remaining 25 leases, a deal valued at approximately $69.1 million. This complex lease sale has been a simmering point of contention since its announcement in May.
The legal proceedings revolve around Section 11.3, a provision that empowers companies to petition the court for the assignment of leases to a prospective tenant, even in the face of landlord objections. A crucial element in such cases is the stance of the monitor, an independent, court-appointed third party tasked with overseeing the company’s creditor protection status and offering impartial assessments.
Despite the monitor, Alvarez & Marsal, explicitly objecting to Liu’s acquisition of the leases, Hudson’s Bay vehemently argues that this conclusion should carry minimal weight. The retailer asserts that the agreement with Liu represents the final viable path to extract any residual value from its extensive portfolio of 98 leases, emphasizing the critical importance of this particular transaction for its financial recovery.
The court heard that Hudson’s Bay conducted a “robust” and comprehensive sales process to find suitable buyers for its leasehold interests. While some leases were successfully offloaded to YM Inc., known for its various mall brands, and one to an existing landlord, the retailer contends that no other proposed deal offered a higher probability of completion than the one presented by Ruby Liu, making her the most strategic choice.
Landlords, however, are challenging the viability of Liu’s vision for the properties, arguing that the department store concept she envisions would fundamentally fail to meet the stipulated terms of the existing leases. They cite earlier media statements and a preliminary business plan that hinted at a retailer integrating diverse dining, entertainment, and recreation experiences—uses that landlords claim are explicitly prohibited under the current lease agreements. Hudson’s Bay’s counsel, Maria Konyukhova, countered these objections, stating that such concepts are not part of Liu’s updated business plan, and she is prepared to accept the leases “as is.”
Further complicating the dispute are significant disagreements over the state of the properties themselves. Landlords allege that Hudson’s Bay left the spaces in considerable disrepair, necessitating millions more in renovation funding and a substantially longer timeframe than Ruby Liu has allocated in her budget. The retailer’s lawyer, Sinziana Hennig, dismissed these repair cost tallies as “inflated,” arguing that there is insufficient evidence to suggest Liu would need to spend “vastly more” than budgeted, and notably, Hudson’s Bay itself was permitted to retain these leases without undertaking such extensive repairs.
Throughout the courtroom proceedings, Ruby Liu maintained a visible presence, accompanied by a sizeable entourage of nearly 20 staff and supporters, many clad in distinctive red T-shirts bearing her name and a diamond logo—a nod to the department store brand she aspires to launch. Lawyers for Hudson’s Bay painted Liu as a financial “fresh slate,” highlighting her zero debt status, significant capital, and easy access to additional funding, positioning her as a far more promising and solvent tenant compared to the struggling incumbent.
