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<\/p>\nA\u00a0B.C.\u00a0billionaire\u00a0who spent the summer fighting\u00a0to\u00a0move a department store she wants\u00a0to\u00a0create into former\u00a0Hudson\u2019s\u00a0Bay\u00a0properties\u00a0has found herself on the losing end of an Ontario Superior\u00a0Court\u00a0decision.<\/p>\n
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Judge Peter Osborne ruled on Friday that landlords for the collapsed retailer will not be forced\u00a0to\u00a0accept\u00a0Ruby\u00a0Liu\u00a0as a tenant.<\/p>\n
In a 48-page judgment, Osborne said he had \u201csignificant concerns\u201d about Liu\u2019s ability\u00a0to\u00a0meet the terms of the leases she wanted and found arguments made by landlords fighting her bid\u00a0to\u00a0take\u00a0over\u00a0properties\u00a0\u201ccompelling.\u201d<\/p>\n
HBC declined\u00a0to\u00a0comment on his decision, while a spokesperson for\u00a0Liu\u00a0did not immediately respond\u00a0to\u00a0messages from The Canadian Press. Both parties have the ability\u00a0to\u00a0appeal the decision, though neither has announced plans\u00a0to.<\/p>\n
Osborne\u2019s decision was months in the making and came after he waded through 25,600 pages of arguments from HBC, a who\u2019s who of commercial landlords and many investors.<\/p>\n
It was back in March that\u00a0Hudson\u2019s\u00a0Bay, riddled with $1.1 billion in debt, filed for creditor protection. Unable\u00a0to\u00a0find a buyer, it later liquidated its 80 stores and 16 more from Saks, and then turned its attention\u00a0to\u00a0assets such as its leases, intellectual property and art.<\/p>\n
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A lease-bidding process netted a dozen bids for 39\u00a0properties. YM Inc., which owns mall brands like Bluenotes, took five for $5.03 million. A landlord took one for $20,000.<\/p>\n
But the biggest bid came from\u00a0Liu, who dreamt of opening a new department store chain named after herself. She wanted up\u00a0to\u00a028 leases\u00a0to\u00a0accomplish the feat and in May, HBC announced it was willing\u00a0to\u00a0sell them\u00a0to\u00a0her.<\/p>\n
Three of them easily won\u00a0court\u00a0approval because they were at\u00a0properties\u00a0in\u00a0B.C. malls\u00a0Liu\u00a0owns \u2014 Woodgrove Centre, Mayfair Shopping Centre and Tsawwassen Mills.<\/p>\n
The remaining 25 became one of the most hotly contested issues in HBC\u2019s winddown. Almost as soon as HBC announced it would sell the leases\u00a0to\u00a0Liu\u00a0for $69.1 million, landlords including Cadillac Fairview Corp. Ltd., Ivanho\u00e9 Cambridge and Oxford\u00a0Properties, met with her and came away with a wide array of objections.<\/p>\n
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Most said they found her unprepared and pointed out that she didn\u2019t even supply them with a business plan initially. While\u00a0Liu\u00a0told the media she would create a department store with dining, entertainment and recreation spaces, landlords said those activities weren\u2019t allowed under the leases she wanted\u00a0to\u00a0take\u00a0over.<\/p>\n
Even if they were permitted, the landlords said the team she assembled wasn\u2019t the right fit. It featured inexperienced executives who had spent time as real estate agents and early childhood educators rather than retail leaders, they said.<\/p>\n
The lack of experience struck Osborne as well.<\/p>\n
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\u201cWhile proposals have been made\u00a0to\u00a0hire certain former HBC executives and managers, those efforts remain incomplete,\u201d he wrote in his judgment.<\/p>\n
\u201cThe overall lack of experience at the leadership level represents a significant risk\u00a0to\u00a0the operational viability of launching and managing 25 large department stores in the contemplated timeline.\u201d<\/p>\n
The business plan\u00a0Liu\u00a0eventually produced was \u201csuperficial\u201d and an updated one \u201cremains deficient,\u201d he said.<\/p>\n
The first plan estimated\u00a0Liu\u00a0could have at least 20 of her stores renovated from the rundown state HBC left them in and operating within 180 days of signing leases.<\/p>\n
Landlords thought the timeline was unachievable and argued her $400-million budget for the project \u2014 money they doubted she had readily available because her malls were $19 million in debt\u00a0over\u00a0the last two years \u2014 also wouldn\u2019t suffice.<\/p>\n
Liu, who made her fortune in Chinese real estate before immigrating\u00a0to\u00a0Canada, maintained that her three malls prove she has what it takes. She argued landlords were battling her because she\u2019s an \u201coutsider\u201d and not their preferred tenant.<\/p>\n
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