An Ontario court judge has rejected a proposed lease that would have seen Les Ailes de la Mode open in the former Hudson’s Bay Company space at Toronto’s Yorkdale Shopping Centre, The Globe and Mail reported.

In a decision filed Monday with the Ontario Superior Court of Justice, Justice Jessica Kimmel ruled that the proposed sublease lacked commercial soundness and dismissed a motion to approve the deal.

The dispute centred on a plan to sublet the large, vacant Yorkdale store to discount retailer Les Ailes de la Mode, owned by retailer Isaac Benitah as part of his Fairweather women’s clothing chain. The lease for the space is held through a joint-venture between RioCan Real Estate Investment Trust and Hudson’s Bay that covers 12 properties and was placed into receivership last year following the retailer’s collapse. FTI Consulting, acting as receiver, had intended to enter into a sublease with Les Ailes if the plan were approved.

“The introduction of retailers inconsistent with this strategy would risk diluting Yorkdale’s brand, diminishing its attractiveness to luxury tenants, and reducing customer traffic across the shopping centre,” Kimmel wrote in the decision filed on Monday, summarizing Oxford’s arguments.

As Connect reported previously, Oxford Properties, owner of Yorkdale, refused to consent to the lease transfer and argued that the proposed tenant was not suitable for the mall, which features high-end retailers including Holt Renfrew, Prada and Tiffany & Co. The court found that Oxford did not unreasonably withhold its consent. Oxford had argued that Les Ailes would be too downmarket for Yorkdale.

Court documents showed concerns about the condition of the former Bay store, which Oxford estimated would require $9.3 million in immediate repairs and $16.9 million in total investments over three years, The Globe and Mail reported. Required work includes replacing the roof, repairing significant exterior wall cracking and updating aging mechanical equipment, according to the Globe.

RioCan holds a $75-million mortgage with Royal Bank of Canada backed by its lease on the former Bay outlet and pays approximately $3.5 million annually in interest. Subletting the space would have given the joint-venture and receiver more time to secure a long-term tenant and preserve the value of the lease. If the space remains vacant, the lease could be terminated in August once a specified period of non-operation is reached.

But Oxford said previously that it stood to lose more than $100 million if the court approved the proposed lease.

Les Ailes had proposed offering clothing, footwear, housewares, accessories and confectionery under mid- to high-end brands, along with private-label products. The retailer had secured commitments from suppliers including Reebok, Steve Madden, Laura Ashley and Perry Ellis, according to the Globe.