Weihong (Ruby) Liu could still secure more Hudson’s Bay Company leases despite strong opposition from landlords to her proposed acquisitions, lawyers told The Canadian Press.

The B.C. billionaire has already acquired three leases located in malls she owns, but 23 landlords are opposing her attempt to take over another 25 covering other unidentified former Bay stores in B.C., Alberta and Ontario. The iconic department-store chain, which is under creditor protection, agreed to sell up to 28 leases to Liu as part of a court-supervised process.

Despite the resistance, legal experts not involved in the case told CP that Liu may prevail under provisions of Canada’s Companies’ Creditors Arrangement Act. Courts must assess whether a lease transfer is supported by the court-appointed monitor, whether the new tenant is suitable, and whether the transfer is appropriate. If those conditions are met, Liu could gain the leases over landlords’ objections.

The monitor, Alvarez & Marsal, has not indicated whether it supports the transaction.

“Before any court application is brought forward, typically the company will test that out with [a monitor],” Jeff Lee, a Saskatoon-based partner at MLT Aikins, told CP. “They’re not going to just sort of fly in blind and hope for the best.”

The appropriateness of a lease transfer could be the ultimate test in this case, the legal experts indicated.

“You can’t go into CCAA as a tenant and then force your landlords to renegotiate their leases as a result,” said Peter Tolensky, a Vancouver-based partner at Lawson Lundell, told CP. 

Meanwhile, Liu has placed a $9.4-million deposit for the leases, on top of the $6 million she already paid for the three that she has obtained, CP reported.

Liu, who has experience as a landlord but not a tenant, plans to launch a new chain under a revised department-store concept. Landlords are concerned about her ability to meet lease conditions and have challenged the scope of her proposed retail operations. Nonetheless, the legal framework could allow the court to approve the assignments even without landlord consent.

Liu has charged that landlords are seeking to block the transfer because they want to reclaim unsold leases, enabling them to charge higher rents for the former store spaces. Leading commercial real estate analysts and executives previously told Connect that the Bay secured highly favourable lease rates when they signed the long-term deal decades ago.

Those rates and terms could transfer to Liu.

All 96 Hudson’s Bay Company stores, including Saks-branded outlets closed June 1.

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