The Hudson’s Bay Company has returned a $9.4-million deposit to B.C. mall owner Ruby Liu after her proposal to acquire 25 more leases from the now-defunct iconic retailer was quashed by an Ontario court.

In a court filing, Franco Perugini, the Bay’s senior vice-president of real estate and legal said the money, part of the $69.1 million total price, has been returned to Liu. Meanwhile, landlords affected by the court’s decisions have notified the Bay that they intend to seek costs associated with the cancelled deal.

Following the court’s October decision, the leases were returned to the landlords, and the deals were to be terminated on November 27. Perugini said in his court filing that signage and furniture, fixtures and equipment have been removed from all but three of the 25 locations. The removals at the three remaining ones will be completed in coming weeks.

Theoretically, the Bay could have attempted to sell the leases to another prospective buyer, but the retailer instead folded its cards after Liu lost her court battle.

The Ontario Superior Court decision prevented Liu from proceeding with her quest to launch a chain of department stores under her own name. Justice Peter Osborne largely sided with the landlords, who opposed being forced to accept Liu as a tenant under the Companies’ Creditors Arrangement Act process, instead of the mall owner and senior lenders.

Liu’s proposed $69.1-million payment for the 25 leases would have only covered a fraction of the Bay’s $1.1-billion debt. The court previously approved Liu’s $6-million acquisition of three leases covering three former Bay store spaces at malls that she owns in the Vancouver area; Victoria, B.C.; and Nanaimo, B.C.

The judge said that the case ultimately boiled down to whether the opposing landlords’ interests or those of one secured creditor, ReStore Capital, should be prioritized. He found that Liu lacked the necessary retail experience and that her business plan was “deficient.”

In addition, he called Liu’s proposed chain “admirably ambitious” but “new and untested.” Osborne also noted that her company that would run the chain is a shell with no assets beyond those that she decides to inject.

Ostensibly, the Bay’s disclaimer clears the way for the landlords to charge higher rents based on today’s market values; for decades, the Bay had paid much less due to highly favourable long-term lease terms that included restrictive covenants.

The landlords that had their leases returned include Cadillac Fairview, Oxford Properties and Ivanhoé Cambridge. Only one landlord did not oppose her bid.

Photo: Shutterstock