A potentially preceding confrontation between Hudson’s Bay and a group of owners who oppose the retailer impulse to sell around two dozen leases to a BC billionaire in the Court on Thursday.
The battle has been slowly since the bay announced in May that he had selected Ruby Liu to buy 28 of his leases.
Three leases in the shopping centers that it has in BC have already been transferred to Liu, but Who’s Who of Canadian Propiatlords is fighting against the sale of 25 more for approximately $ 69.1 million, saying that the deadlines and the budget in their business plan are insufficient for her to develop a new department store.
The group, including Cadillac Fairview, Oxford Properties and Ivanhoé Cambridge, does not want Liu to make the purchase because they say that the new department stores they want to launch will fail due to their inexperience and insufficient business plan.
The owners of properties previously leased by the Hudson’s Bay company oppose the offers of billionaire Ruby Liu, arguing that he lacks “time, money, experience or plans to succeed,” according to a judicial document.
Bay’s lawyer, Maria Konyukhova, said in the Court on Thursday that the result of the case “will have a preceding value” for future lease sales.
In question, it is a section of the Law of Creditors of the Companies, the law under which companies, including bay, present the protection of creditors when they cannot deal with their debt.
Section 11.3 allows companies to ask the court to assign leases to a possible tenant against the objections of the owners.
If Judge Peter Osborne rises with the retailer, the measure could recover up to $ 50 million for the most important lenders of department stores.
When deciding whether to do the task, the court has to consider three things.
The first is whether the sale counts the monitor support, an independent and independent third designated by the court that regularly reviews the protection of the bay creditor.
The monitor in the case of Bay, Álvarez and Marsal, has opposed that Liu obtains leases. However, the retailer argues that the conclusion “should be given little or any weight” because Liu’s agreement is “the last way to perform any value for the 98 leases of the company.”
The bay carried out a “robust” sales process to find buyers for their leases. A handful was sold to YM Inc., the owner of several trademarks of shopping centers, including West49, and one to an owner, but no other agreement had greater possibilities of completion than those of Liu, said Konyukhova.
The second and third aspect that the court must consider under section 11.3 are if Liu can comply with the obligations of the leases you want and determine if your business is an “appropriate” tenant.
The owners have argued that LIU department stores expect that they will not meet the terms of the leases. They indicate the statements of the media and an early business plan that presented that he spoke about the execution of a retailer full of experiences of restaurants, entertainment and recreation.
The owners say that these uses are not allowed under the leases of the bay, but Konyukhova said Thursday that they are not part of their last business plan and Liu is prepared to assume the leases “as is.”
The owners have also had problems with the deadlines and budgets in the Liu Plan. She wants to operate three store levels, ranging from the flagship to standard locations, and will see $ 120 million in renovations. Some of the stores can be opened within six months after obtaining leases, he argues.
The owners say that the bay left the properties that it used in such a bad condition that the renewals require millions in significant additional funds and time that Liu has assigned for them.
The owners of repair costs they have counted are “inflated,” said Bay lawyer, Sinziana Hennig on Thursday. She argued that there are small evidence that Liu will have to spend “much more” than he has budgeted and pointed out that the bay was allowed to maintain leases without making repairs.
While Hennig and Konyukhova spoke, Liu sat in the gallery of the courtroom along with a gang of almost 20 employees and followers. His entourage was so great that many members were sent to an overflow room. The group was dressed as red t -shirts with a diamond logo and “Ruby Liu”, the name of the department stores they want to launch.
The procedures they saw began with Konyukhova saying that the owners’ arguments are “wrong but totally logical” when you take into account how much they will win if the agreement fails.
If Liu cannot buy the leases, the owners will recover their properties. They can increase rental prices from the low levels that the bay paid and even rebuild properties for other uses.
“Why did the owners allow the properties to fall into poor condition? Sugo because they knew that this would come and wanted to recover their stores for nothing,” said Jeremy Dacks, a lawyer from Pathlight Capital, a lender who remains to receive a lot if Liu’s agreement continues.
Unfortunately for the owners, a well capitalized bidder appeared, making the decision of the owners not to offer for their own leases as a “high -risk bet,” Dacks said.
The BC billionaire, Ruby Liu, hopes to expand his empire of the mall assuming 28 former retail spaces of Hudson’s Bay. He joined Gloria Macarenko from CBC with a translator to share her vision for department stores, in her first interview with the media in English in Canada.
The owners have been so vehement in their opposition because “they have a different vision of how their space should be used”, but that should not prevent Liu from receiving leases, added his lawyer Graham Phoenix.
Konyukhova agreed and said that Liu’s possible possession represents “a new board.”
Liu not only has zero debt, unlike the bay, but it has significant capital and can easily obtain more, said the lawyer.
He has also pledged to pay a year of rent in advance, which was something that the bay never provided, and does not plan to enter the electronic commerce business with which the bay had problems to obtain success.
