The Ontario Superior Court is at the centre of a high-stakes legal battle that could shape the fate of dozens of former Hudson’s Bay leases. At issue is whether B.C. billionaire Weihong (Ruby) Liu should be allowed to assume 25 of the shuttered department store chain’s leases in order to launch a new retail brand. Parties were in Court Thursday with further arguments Friday morning.
Hudson’s Bay, facing more than $1.1 billion in debt, closed its 96 Hudson’s Bay, Saks Fifth Avenue and Saks OFF 5TH stores across Canada earlier this year under creditor protection. Its remaining assets include dozens of favourable leases, some with terms stretching decades. These are now the focus of an intense dispute between the retailer, its creditors, and a group of Canada’s most powerful landlords.
A $69.1 million deal in dispute
Ruby Liu, owner of Nanaimo-based Central Walk, struck a $69.1 million agreement in May to acquire 28 leases. Three were transferred without incident, as they were in shopping centres she already owns. But the proposed transfer of 25 additional Hudson’s Bay leases has ignited opposition from Cadillac Fairview, Oxford Properties, and Ivanhoé Cambridge.
The landlords argue that Liu lacks the operational expertise and financial planning to succeed in creating a new national chain, warning that her plans for “Ruby Liu” department stores are underdeveloped and unrealistic.
Her lawyers counter that she was the highest bidder in a court-supervised sales process, that her deal offers creditors a rare chance to recoup value, and that the law requires only that the assignment be reasonable, not flawless.
The stakes for insolvency law
“This is the last path to realizing any value,” said Maria Konyukhova of Stikeman Elliott LLP, representing Hudson’s Bay. She told the court the outcome would set a precedent for future lease transfers in insolvency cases.
If approved, the deal would generate roughly $50 million for senior creditors. Some, such as Pathlight Capital LP, support the proposal. But others, represented by ReStore Capital LLC, object. They argue that delays have eroded their collateral and that Hudson’s Bay mishandled its wind-down.
The court-appointed monitor, Alvarez & Marsal, has also recommended rejection. It cited concerns that Liu’s business plan “is not sufficiently developed or realistic” and warned of near-term insolvency risks.
Landlords argue “bad deal”
The landlords’ legal team has pressed the court to reject the transaction. Jeremy Opolsky of Torys LLP, representing Cadillac Fairview, said the plan forces landlords to accept “a tenant they do not trust.” He argued Liu’s financial projections are inflated and rely too heavily on Hudson’s Bay’s past performance, an unsuitable comparison for a new retail brand.
Landlords also say the scale of renovations needed is far greater than the $120 million Liu has budgeted. “This assignment is a bad deal,” Mr. Opolsky told the court.
Supporters highlight capital and jobs
Liu’s team has defended her record, noting that she successfully developed and sold a mall in Shenzhen, China, for more than USD$1 billion. In Canada, she has acquired and operated shopping centres, including Woodgrove Centre in Nanaimo.
Her lawyers stressed she has no corporate debt, can secure additional capital, and has committed to paying a year’s rent upfront—something Hudson’s Bay never offered. The plan promises more than 1,000 new jobs, investment in long-neglected retail spaces, and renewed opportunities for suppliers and vendors.
“This is a businessperson with a real history of success,” said Graham Phoenix of Loopstra Nixon LLP, who represents Liu’s company.
A clash over retail vision
Central to the dispute is the legacy of Hudson’s Bay’s leases. The contracts granted the company favourable terms, including below-market rent and veto rights over certain landlord redevelopment plans. These rights made the leases valuable but also contentious.
Landlords say they want their properties back to redevelop or lease at higher rates. Hudson’s Bay’s lenders argue that landlords are motivated by those interests rather than Liu’s ability to succeed. “They wanted to get their stores back for nothing,” said Jeremy Dacks, counsel for Pathlight Capital.
Liu has also taken unusual steps to win public support, including launching a Change.org petition and writing directly to the presiding judge. The latter prompted a rebuke from the Ontario Superior Court’s chief justice, who warned her against further “harassing communications.”
What comes next
The case hinges on Section 11.3 of the Companies’ Creditors Arrangement Act, which allows a court to assign leases to new tenants against landlord objections if the proposed tenant is “appropriate.” The court must weigh the support of the monitor, the financial capacity of the new tenant, and the suitability of the business plan.
Judge Peter Osborne’s ruling could have lasting implications for how commercial leases are transferred in Canadian insolvencies. It will determine whether Hudson’s Bay’s creditors can salvage value from the company’s demise, or whether landlords will regain control of coveted mall properties.
For now, the battle underscores the broader uncertainty facing Canadian department stores. Once anchor tenants critical to mall success, their decline has left landlords, creditors, and new investors struggling to define what comes next.
