TORONTO – One of Hudson’s Bay’s biggest lenders says the department store chain has handled its liquidation so badly that a court should end a buzzy but fraught lease transaction the retailer signed with a B.C. billionaire and subject the company to even more oversight as it winds down.
A motion filed Tuesday by Restore Capital LLC asks a court to stop the defunct retailer from selling up to 25 of its leases to mall owner Ruby Liu and appoint a “super monitor” to more prudently liquidate the remainder of its assets.
It argues both are necessary because the retailer has “frittered away” Restore’s collateral “without any clear path or plan towards realizing any benefit for HBC’s stakeholders.”
Restore, an investment manager, spent two decades lending money to the Bay. Its most recent tranche sent the 355-year-old retailer $151 million in December 2024, three months before the Bay filed for creditor protection.
Canada’s oldest company has since liquidated all 80 of its stores and another 16 under its sister Saks banners, as sold assets including leases and intellectual property.
The company brokered two lease deals with Liu in May. The first — a $6-million transaction involving three leases for stores at B.C. malls she owns — was approved by a court last month.
Another deal was for up to 25 more leases in Alberta, B.C. and Ontario. The Bay has yet to seek court approval for the second deal, which spans 25 more leases in Alberta, B.C. and Ontario.
Landlords, including Cadillac Fairview and Oxford Properties, have overwhelmingly opposed taking on Liu as a tenant because they say she has not provided them with a practical business plan for the department stores she wants to run in their properties.
Restore’s motion seizes on their dissent and positions the work the Bay has been doing to try to garner their approval as costly and fruitless.
“HBC has incurred exorbitant rent costs and professional fees in trying to obtain the necessary landlord consents with nothing to show for it, despite the landlords having indicated long ago that no consent will be provided,” Restore’s motion says.
It points out that the latest financial forecasts show between June 30 and Aug. 15, the Bay will incur $7.5 million in rent costs in connection with pursing the Liu deal and a significant portion of the $8.5 million in professional fees projected during the seven-week period are linked to it as well.
Liu, who did not immediately respond to a request for comment, says if a court approves the sale, she believes she can win landlords over.
If the company can’t close on a deal with Liu, Restore and other lenders will see their collateral “irretrievably eroded,” the lender said in its filings.
Hudson’s Bay spokesperson Tiffany Bourré said the retailer will respond to the motion “in due course.”
In the meantime, she said it “continues to manage the monetization of its assets and the wind-up of its affairs in a responsible and diligent manner, appropriately balancing the interests of various stakeholders.”
Yet Restore said it’s seen its chances of recovering cash stymied because it said the Bay mismanaged its liquidation by failing to disclaim leases that no one wanted to buy in a timely fashion, close stores properly and remove fixtures and equipment.
These moves and a decision to “unnecessarily” pay for the removal of exterior signage has led to an additional $18 million in expenditures that would otherwise form the basis of its recovery, Restore said.
It argues these expenses and the Bay’s overall actions have made it so lenders are “perversely being compelled to fund increases in their own projected shortfall.”
Restore fears the only other chance at recovering money it is owed will be turning to the company’s pension plan, which has a surplus but might take years to draw any money from because of potential conflicting views on entitlements.
As a result, Restore wants the court to expand the powers of Alvarez and Marsal, a monitor previously appointed to guide the Bay through the creditor protection process, so the company can be wound down.
If the court doesn’t agree to a “super monitor” arrangement, it suggests appointing Richter Consulting Inc. as a receiver.
This report by The Canadian Press was first published July 8, 2025.
