A Toronto-based clothing retailer that owns brands such as Bluenotes, Suzy Shier and Urban Planet received approval from an Ontario court on Thursday to take over five of

Hudson’s Bay Co.’s

leases, even as British Columbia-based billionaire

Ruby Liu’s bid

to take on 25 of the Bay’s other leases continues to face opposition from landlords.

YM Inc. bought the leases located in Ontario, Alberta and Manitoba for about $5 million. Initially, the agreement was for eight leases, but the parties couldn’t reach an agreement on three of them, a lawyer representing Hudson’s Bay said at the hearing.

Aside from YM’s five leases, the court also approved the $20,000 sale of an HBC lease in Metrotown in Burnaby, B.C., to Ivanhoe Realties Inc. HBC will not have to pay rent for this location from June 15 onwards and it will not incur any costs for removing the signage and furniture from the premises.

“So, the total consideration is much higher,” HBC’s lawyer said.

HBC, Canada’s oldest retailer, which filed for bankruptcy protection under the Companies’ Creditors Arrangement Act in March, is trying to pay back millions of dollars to its creditors. Aside from monetizing its leases, HBC also fired all its employees, sold intellectual property rights to

Canadian Tire Corp. Ltd.

and is trying to auction off its artifacts. Each of those steps needs to be approved by an Ontario court.

Towards the end of August, HBC will try to get the court’s approval to sell 25 leases to Liu, but it has been contested by landlords and a senior HBC lender.

The hearing on Thursday wasn’t meant to discuss HBC’s motion on the sale of those 25 leases, but lawyers representing the landlords voiced their concerns about how letters exchanged between HBC and Liu suggested that the company threatened to terminate the deal because she was supposedly in breach of the agreement signed in May.

On July 29, court documents showed that Liu sent a letter earlier in the month to Judge Peter Osborne, who has been presiding over the HBC hearings since March, with a number of attachments detailing how HBC had “repeatedly threatened to terminate” the agreement and “forfeit” her deposit.

One of the attachments included a letter from an HBC lawyer to Liu’s counsel that stated her company had failed to provide “adequate responses to basic questions from the landlords regarding the proposed tenant’s financial covenant, retail operation experience, capital expenditures plan for each lease location and intended suppliers and product mix.”

The letter also said Liu was in breach of the agreement.

The office of the Chief Justice–Superior Court of Justice told Liu in a letter that it was inappropriate for her to communicate directly with the judge.

“Please be advised that you should not, under any circumstances, attempt to communicate directly with the judge in this matter. You are directed not to do so again,” the letter said.

Representatives of the landlords on Thursday said the contents of the letter were surprising and that it was troubling to know what was going on behind the scenes.

“Everyone should be on the same level playing field,” one lawyer said. “That playing field was not level. Information was not forthcoming that would have permitted my client to perhaps take steps in being offensive as opposed to defensive in this position because we were not informed what was going on behind the scene.”

Ashleigh Taylor, a lawyer representing HBC, rejected the claims and said he has “trouble” with the suggestion that something improper had taken place because a copy of the letter wasn’t sent to the other parties.

“I’m sure my friend would not disclose to us all of the communications that they have had between them, nor would I ask for it,

and to suggest that we should make it public so that everyone is on a level playing field, every piece of correspondence, is unfounded

” he said.

Aside from Liu’s leases, HBC is trying to receive approval to sell its Royal Charter, a historical document that gave it exclusive trading rights over a portion of Canada in 1670, to Whittington Investments Ltd., a private Canadian entity owned by the Weston family, for $12.5 million.

  • Hudson’s Bay asks court to force landlords to let B.C. billionaire take over leases
  • Hudson’s Bay fights back against lender that wants to terminate lease sales to Ruby Liu

The company plans to immediately donate it to the Canadian Museum of History and will also donate an additional $1 million so that the museum can fund a program to help share the artifact with other museums and Indigenous groups. As such, HBC wants to exclude the charter from its proposed art auction.

HBC will return to court with this request in September. It wants to give other stakeholders enough time to assess the proposal before receiving an approval from the court.

• Email: nkarim@postmedia.com

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