As the court-imposed July 15 deadline looms in Hudson’s Bay’s court-supervised restructuring, a key lender has asked the Ontario Superior Court to step in and halt what it describes as a costly and mismanaged wind-down. In a detailed motion, Restore Capital LLC has demanded that the company’s deal to sell up to 25 store leases to B.C.-based mall owner Ruby Liu be terminated and that the court install a “Super Monitor” to oversee the liquidation of what remains of the 355-year-old retailer.
The request underscores deepening frustrations from lenders who say their collateral is being squandered as Hudson’s Bay racks up millions in rent and professional fees tied to a deal that increasingly appears unlikely to succeed.
“Restore and Pathlight are just fed up,” said retail strategist Carl Boutet in an interview with Retail Insider. “They’ve been part of this saga since the beginning. At first, they stepped back when talks of receivership surfaced. Now, they’re saying ‘enough is enough.’”
Boutet says the underlying issue is the mounting cost and complexity of transferring leases to Liu. Restore alleges that Hudson’s Bay has incurred more than $18 million in unnecessary expenses, funds that otherwise could have gone to creditors. These include continued rent payments, consultant fees, and the removal of store signage.
According to court filings, Restore claims Hudson’s Bay has “frittered away” collateral and mismanaged the lease assignment process to such a degree that the appointment of a Super Monitor, or alternatively a full receiver, is now essential to protect creditor interests.
What Is a Super Monitor?
The request to appoint a Super Monitor is unusual, but not without precedent. Under the Companies’ Creditors Arrangement Act (CCAA), a monitor typically plays an advisory role, reporting to the court and overseeing restructuring efforts. However, in cases where management has lost the confidence of creditors or the court, the monitor’s powers can be expanded.
“In this case, a Super Monitor would have executive authority,” Boutet explained. “They wouldn’t just advise—they could actually act. That includes selling assets, terminating contracts, and more or less taking over operations.”
Restore suggests Alvarez & Marsal, the firm currently serving as court-appointed monitor, be granted these expanded powers. If not, they propose Richter Consulting Inc. step in as a receiver with full liquidation authority.
Liu Lease Deal Collapsing Under Landlord Opposition
The controversy centres around a proposed deal between Hudson’s Bay and Ruby Liu to take over up to 25 store leases in Ontario, Alberta, and British Columbia. While a smaller, court-approved deal involving three of Liu’s own Central Walk malls went through, landlords like Cadillac Fairview and Oxford Properties, have rejected Liu’s broader expansion plans.
“From the very beginning, we raised concerns that landlord covenants wouldn’t be met,” said Boutet. “And now, landlords are saying Liu hasn’t provided a viable business plan.”
The court filings confirm that Liu has struggled to secure landlord approvals, despite Hudson’s Bay spending millions to support the process. Restore estimates that between June 30 and August 15, Hudson’s Bay will spend an additional $7.5 million in rent and a large portion of $8.5 million in professional fees on the Liu deal alone.
Diminishing Returns and Legal Risks
Time is working against all parties involved. Hudson’s Bay’s inability to close the Liu transaction means stores remain in limbo, consultants remain on retainer, and rents continue to accrue. “This is money that’s evaporating daily,” Boutet noted. “And it’s money that should be going back to creditors.”
According to filings, Restore believes its only remaining path to recovery could be Hudson’s Bay’s pension fund surplus. It’s an option fraught with legal complexity and potential delays. “There’s a real risk that if the Liu deal isn’t wrapped up quickly, there will be nothing left,” Boutet warned.
Adding to concerns, Restore claims Hudson’s Bay failed to disclaim unassigned leases in a timely fashion and spent excessively on dismantling stores. “They acted like the money was theirs, not ours,” Restore CEO Ian Fredericks stated in an affidavit. “Our projected recoveries are now millions of dollars lower.”
A Timeline of Stalled Progress
Hudson’s Bay filed for creditor protection in March 2025. Since then, it has liquidated 80 stores and another 16 under the Saks Fifth Avenue and Saks OFF 5TH banners. While the initial court process provided some hope that select leases could be transferred and stores reimagined under Liu’s new concept, opposition and delays have stalled momentum.
“The creditors expected this would be signed, sealed, and delivered by now,” Boutet said. “Instead, we’re nearing the July 15 outside date with no resolution.”
July 15 marks the final court-set deadline for concluding the current Sale and Investment Solicitation Process (SISP). Without a court-approved path forward, Restore and other secured lenders appear poised to force the matter.
Implications for Ruby Liu’s Department Store Vision
Liu, a Vancouver-based mall owner, had positioned herself as a successor to Hudson’s Bay in key locations across Canada. Her plans have included introducing a new department store concept under the ‘Ruby Liu’ banner, starting with the three Central Walk properties.
But this latest motion could mark the end of her ambitions to acquire the full portfolio of 25 stores.
“Honestly, it may be a blessing in disguise,” said Boutet. “She could now focus on her three confirmed locations and build something strong from there.”
Liu has previously expressed confidence that she could win over landlords if the court approves the lease transfer.
Lenders Signal Loss of Patience
Restore’s decision to go to court is significant for another reason—it marks a rupture in a relationship that stretches back over two decades. Restore played a pivotal role in helping take HBC private in 2019 and remained a key lender throughout the company’s recent chapter, including a $151 million loan issued in December 2024.
“They’ve been on this ride for a long time,” Boutet noted. “They probably don’t want to hear the words ‘Hudson’s Bay’ again for a very long time.”
The motion also highlights broader dissatisfaction among secured creditors with Hudson’s Bay’s wind-down strategy, noting that management and directors are no longer aligned with creditor interests.
“This isn’t just about leases,” said Boutet. “This is about how one of Canada’s most iconic companies is being dismantled.”
Pension Fund Surplus Could Become a Target
One of the more contentious aspects of the court filing is Restore’s suggestion that Hudson’s Bay’s pension fund surplus could be tapped for recovery. Pension funds are typically off-limits in restructuring processes, but surplus funds sometimes exist beyond what is needed to meet obligations.
“There’s always a debate over who that surplus belongs to,” Boutet explained. “Is it the pensioners, who could use it to preserve cost-of-living indexing? Or the creditors, who argue it’s part of the estate?”
Boutet also pointed out that HBC’s pension discussions are especially complex given that many of the company’s landlords, like Cadillac Fairview, are owned by the very pension funds that might be impacted. “It all comes full circle,” he added.
What Happens Next?
The Ontario Superior Court is expected to rule on Restore’s motion in the coming days. If approved, the appointment of a Super Monitor could significantly alter the trajectory of the wind-down.
“A Super Monitor could force a quick sale or liquidation of the remaining assets,” Boutet said. “It removes the option of further negotiation and essentially fast-tracks the end.”
For Ruby Liu, it may mean a shift in strategy that could possibly involve negotiating brand-new leases directly with landlords, outside the CCAA framework. For creditors, it could bring long-awaited clarity and recovery.
“Ultimately, everyone wants this resolved,” Boutet said. “But how it gets resolved, and who walks away with what, remains very much in question.”
It feels like there is a deeper story than “Liu hasn’t provided a viable business plan” for landlords to prefer a vacant store over a rent-paying tenant.