Hudson’s Bay is applying to the court for the assignment of up to 25 of its leases to B.C. billionaire Weihong Liu’s company, Central Walk, despite having no landlord consent and even weighing scrapping the deal altogether just weeks ago.
The defunct retailer filed a motion record Tuesday evening seeking the Superior Court of Ontario’s approval of Liu’s $69.1-million bid for leases across Ontario, Alberta and British Columbia, which it claims would result in significant recovery for its creditors, restore about 1,800 jobs, and boost local economies.
“I am of the view that … Central Walk has the necessary marketing tools that will be instrumental in generating excitement amongst consumers, making Central Walk’s vision of generating increased foot traffic at its stores achievable,” said Franco Perugini, Hudson’s Bay’s senior vice-president of real estate and legal, in the court document.
Liu, who owns three shopping malls in B.C., pledged to launch a “modern department store” brand — named after her English name, Ruby Liu — that will serve different generations and deliver immersive shopping experiences at the former Hudson’s Bay locations.
To date, not a single landlord has agreed to her plan. Most have submitted letters to Liu in June, citing insufficient evidence of her retail experience and the lack of a credible business plan as reasons for opposing the lease reassignment.
Court documents on Tuesday showed Hudson’s Bay had considered terminating the agreement with Central Walk earlier this month but opted to proceed with a motion to compel landlords to accept Central Walk as a tenant — a matter pending the judge’s final ruling — after consulting stakeholders, including its largest lender, Pathlight Capital.
Liu told the court that Central Walk would comply with existing use provisions and obligations under the leases and begin rent payment immediately after the assignment. The company has pledged a $375-million initial equity investment, including $120 million for store renovations, and plans to open the locations on a rolling basis within six to 12 months.
Several former senior Hudson’s Bay employees — including Perugini, Lou Ampas, former divisional vice-president of construction, and Mithun Sinharoy, former senior vice-president of supply chain, fulfilment and logistics — and 11 former managers are either in discussions to join or have already agreed to join Central Walk.
Central Walk also plans to engage J2 Retail Management, which has submitted a proposal to support inventory stocking and supply chain logistics.
Liu, an immigrant and entrepreneur from China, stated in the court filing that her company has “a proven track record of identifying the fixable shortcomings of retail spaces and remedying them.” She pointed to her Tsawwassen Mills mall, south of Vancouver, where she claims to have increased annual foot traffic by two million and boosted rental revenue by 15 per cent since 2022.
“I am confident that if the leases are assigned, (my company) will not only perform all obligations under the leases, but it will exceed all expectations and emerge as a leader in Canadian retail. Otherwise, these spaces will be vacant for much longer, benefitting neither the landlords nor their communities,” Liu said.
Central Walk’s business plan is expected to face challenges from opposing landlords when the court hears Hudson’s Bay’s lease assignment motion, along with a motion from the retailer’s senior lender, Restore, to terminate the transaction with Central Walk, on Aug. 28.
Liu successfully bought out Hudson’s Bay’s leases on three shopping centres she owns for $6 million last month.
Just hours before Hudson’s Bay filed its motion, a set of surprising court documents was shared with the lawyers of stakeholders, revealing that the deal had repeatedly come close to collapsing — prompting Liu to write to Justice Peter J. Osborne in an effort to win his support in early July.
Correspondence between Hudson’s Bay and Liu’s lawyer, disclosed in court documents, shows that the retailer previously warned Liu that her company was in breach of the purchase agreement for failing to take “the most basic and necessary steps to advance its bid” and for ignoring repeated reminders to prepare substantive information to persuade landlords.
Hudson’s Bay issued an ultimatum to Liu in a letter on July 5, setting out a series of deadlines requiring her company to provide more information about its business plan and offering to knock $3 million off the price of the leases in exchange for Liu using some of her deposit to retain Hudson’s Bay’s former chief executive officer, Liz Rodbell, as a consultant, and KPMG LLP as a financial adviser.
On July 9 and 10, Liu wrote two emails to the judge, against the retailer’s advice, recounting her rags-to-riches story in China and filed complaints against her former lawyers, Hudson’s Bay and the landlords, who she said had “allied together to bypass court procedures” and “schemed to regain the leases for nothing.”
“HBC has repeatedly threatened to terminate our agreement and forfeit our deposit. I sincerely thank you for your time and hope you can uphold justice in accordance with the law,” she added.
The Office of the Chief Justice responded to Liu, warning her that it is inappropriate to contact the judge directly under any circumstances, and any further correspondence would be considered as harassment.
