Hudson’s Bay wants to sell leases to billionaire to appease lender, landlords say

A person checks out the store closing advertising at the Hudson's Bay in Toronto, on Friday, May 30, 2025. THE CANADIAN PRESS/Nathan Denette

A group of Hudson’s Bay landlords say a lender’s desire to recoup cash is the only reason the shuttered department store is pursuing a plan to sell its leases to a B.C. billionaire.

In new court documents filed late Monday, the landlords say the retailer is keen to make a sale of 25 leases to Ruby Liu happen because of Pathlight Capital LP.

The group of landlords, including Cadillac Fairview and Oxford Properties, point out that Pathlight is the only creditor in favour of the sale and posits that its support stems from the lender wanting its share of Liu’s $69.1-million offer.

“All HBC seeks to do here is squeeze out more money for Pathlight,” the landlords say in their joint filing.

When the Bay filed for creditor protection in March, court records show Pathlight was owed more than $95 million. The sum was a fraction of the roughly $1 billion owed to all of the retailer’s creditors.

• Latest updates on company news here

To chip away at its debt, the Bay liquidated and closed all of its stores and then began selling off its leases. Five were sold to YM Inc., which owns a slew of mall brands including Bluenotes, Urban Planet, Suzy Shier and West 49, for $5.03 million. Ivanhoe Realities picked up the lease for Metrotown in Burnaby, B.C., for $20,000.

Liu, who owns three B.C. malls and a golf course, wanted 28 of the leases to open a new department store named after herself. The sale of the first three leases for $6 million was quickly approved because they covered properties at malls she owns, but the remaining 25 she wants have become a hotly contested matter.

Landlords, which also include KingSett Capital, Morguard and Primaris, are opposed to Liu taking over their leases because they say her plans to open entertainment and dining spaces within the department store she’s designing for their properties are not allowed under the leases.

The landlords also say she doesn’t have enough expertise to launch a new department store and charge that the project’s budget and timelines are unrealistic. They estimate she will need millions more to overhaul properties and believe the time she has allocated to the renovations, hiring staff and developing a new brand is insufficient.

“She will fail before she opens a store. By that time Pathlight will be gone, and the landlords will be left with the pieces, unable to obtain any relief against the shell PurchaserCo,” the landlords say in court documents referencing Liu.

The documents were filed days before another lender, ReStore Capital, is expected in court to ask a judge to reject the Liu deal.

Pathlight said in a factum filed late Monday that ReStore’s motion is “senseless” and “a thinly disguised attempt to recover their indebtedness ahead of others.”

The Bay and Liu have argued against ReStore’s motion, saying she has what it takes to develop a department store and is willing to pour more money than budgeted into the venture, if renovation and launch costs rise beyond her initial estimates.

They say landlords are only opposing the deal because they’d much rather the leases be disclaimed, so they can develop them into commercial, residential and mixed-use sites. When leases are disclaimed, they are turned back over to landlords, who have the freedom to choose who moves into their properties.

The landlords charge that any idea that are opposing Liu to get their leases back and then, a windfall, is “wrong.”

“The only party seeking a windfall is Pathlight, which seeks to shift its potential losses to the landlords,” the landlords say.

They allege Pathlight is the only creditor which will gain from Liu getting the leases and point out that the company has a continuing relationship with the Bay’s U.S. business, which includes Saks U.S. and Neiman Marcus. They also claim the Bay has repeatedly followed Pathlight’s direction

They say the landlords are the largest creditor group in the Bay’s creditor protection proceedings and will suffer hundreds of millions of dollars more in losses if the Liu lease deal is approved.

• Trade War coverage on BNNBloomberg.ca

Some of the leases they say Liu wants date back to early 1972 and came with low rent in return for an anchor tenant that had a national brand and guaranteed limited uses for their space.

The Bay “seeks to forcibly flip that bargain on its head.”

“The landlords would be forced into business with a new company with no real assets, no infrastructure, no brand recognition, and no department store experience — run by a person who has no retail experience, undisclosed liabilities and who holds all assets through a complicated web of overseas holdings.” the landlords say.

“All of this, not to further a restructuring, but to pay a sole secured creditor.”

---

Tara Deschamps, The Canadian Press

This report by The Canadian Press was first published Aug. 26, 2025.