A Toronto court hearing to determine the fate of 25 Hudson’s Bay leases has been adjourned to allow prospective purchaser and B.C. billionaire Weihong Liu time to retain new legal counsel.
Ontario Superior Court Justice Peter Osborne made the decision in court on Tuesday morning.
“To do fairness to this and all the circumstances, it’s got to be adjourned,” he told lawyers representing Hudson’s Bay, its lenders and landlords, at the University Ave. courthouse.
Osborne noted that neither of the two law firms that previously represented Liu and her company, shopping mall owner Central Walk, were retained Tuesday to represent them in this instance.
“I not only urge but recommend in the strongest terms” that the billionaire hire a lawyer to represent her and her plans to buy the leases, Osborne told Liu.
“There are significant concerns being expressed about those plans, so it is important for me to hear from you fully about what those plans are,” he said.
Liu has already purchased three Hudson’s Bay leases in B.C. shopping malls she owns for $6 million, but has her sights on an additional 25 other leases in shopping centres in Ontario and Alberta, where she planned to open new stores named after herself.
Hudson’s Bay’s stakeholders aren’t all in favour, though.
Restore Capital, an agent representing some of Hudson’s Bay’s senior lenders, submitted a motion to the court last week asking it to terminate the retailer’s transaction with Liu.
Landlords have been opposed to Liu buying the leases because they say she has not tabled a proper business plan.
In its court submission, Restore pointed out Hudson’s Bay hasn’t brought forward a motion to complete Liu’s bid, despite entering the agreement more than a month ago. That in itself is “prejudicial” to lenders, said Restore’s lawyer, Linc Rogers.
Asked for her position, Liu told the court she wants to hire legal counsel “as soon as possible.” Through a translator, she explained that Central Walk will “work closely” with Hudson’s Bay, has “hired experts” and submitted a business plan on May 1 that gets continually updated. Liu was previously represented by both Cassels Brock & Blackwell LLP and Miller Thomson but has parted ways with each.
“We have done tremendous work to prepare for the store opening, to hire people, to create jobs,” said Liu. “So we’re ready to open the stores. We’re ready.”
In addition to asking for the purchase agreement between Hudson’s Bay and Central Walk to be cancelled, Restore’s motion also asks the court to give Hudson’s Bay’s court-appointed monitor expanded powers over the retailer to protect creditor’s interests, and to order HBC to “immediately disclaim” all remaining leases subject to the Central Walk purchase agreement and distribute $6 million to Restore.
The $6 million to be distributed — which came from Liu’s purchase of the first three Hudson’s Bay leases — was another factor in Osborne’s decision to adjourn, as Hudson’s Bay, Restore and Pathlight Capital, another major lender, were in disagreement about who is entitled to it.
To aid in the Bay’s wind down, Restore wants the court to appoint a “super monitor” to subject the department store chain to even more oversight. If the court doesn’t agree, Restore suggests appointing Richter Consulting Inc. as a receiver.
The Bay argued it doesn’t need more oversight because it’s properly governed. It maintains the Liu deal is the best shot it has at recovering more cash for creditors.
With files from Estella Ren and the Canadian Press
