Hudson's Bay landlords are demanding approximately $2.4 million from the defunct department store chain to recoup expenses incurred during a legal battle over a proposed lease sale to B.C. billionaire Ruby Liu. The landlords argued that the proposed deal was flawed and that Liu was an unsuitable tenant.
Key Takeaways
- Hudson's Bay landlords are seeking $2.4 million in legal costs.
- The costs stem from a dispute over selling leases to Ruby Liu.
- HBC argues that awarding costs could deter future creditor protection cases.
- Landlords claim they offered a settlement that HBC refused.
The Lease Battle
The landlords, including major real estate firms like Cadillac Fairview and Oxford Properties, incurred "significant" expenses preparing court records and participating in cross-examinations. They contend that these costs should be covered because they attempted to resolve the issue amicably through a settlement proposal over the summer. This settlement, they claim, would have prevented a "wholly avoidable" fight over a deal that HBC allegedly knew was problematic, but pursued to appease creditors like Pathlight Capital.
HBC's Opposition
Hudson's Bay is pushing back against the landlords' request. The retailer argues that awarding such costs would create a "chilling effect" on other creditor protection cases, potentially making future debtors hesitant to explore lease sales for fear of incurring similar fees. HBC maintains that pursuing the deal with Liu was a strategic move to generate over $50 million in net proceeds and significantly reduce their secured debt.
Pathlight Capital's Stance
Lender Pathlight Capital supports HBC's position, noting in a court filing that the landlords have already received rent payments. Pathlight suggests that awarding the requested amount would constitute a "significant windfall" for the property owners.
The Proposed Settlement
Court filings reveal that just before the Liu matter was set to go to court, the landlords proposed a settlement. Under this proposal, they would have accepted their leases back as of September 15 and agreed to cover the costs of removing store fixtures and signage. However, HBC reportedly refused this offer, instead demanding a $29 million payment.
Case Developments
While Judge Peter Osborne had been overseeing the case, he was elevated to the Court of Appeal for Ontario in late December. Submissions from the landlords, HBC, and Pathlight were filed in November and December. It remains unclear which judge will ultimately rule on the landlords' request for costs.
