Few people in Canada had heard of Ruby Liu when she emerged this year with an ambitious plan to reinvent dozens of shuttered Hudson’s Bay Co. outlets, the remnants of a bankrupt department store chain that’s played an outsize role in the country’s history.
The owner of three shopping centers and a golf course in British Columbia, Liu said she reaped $1 billion building and selling a mall in China. She now intends to spend about C$450 million ($325 million) buying the leases of 25 Hudson’s Bay stores for a new retail chain.
But Liu’s prospective landlords, which include some of Canada’s biggest pension funds, bitterly oppose having Liu as a tenant after a series of disastrous in-person meetings. Accounts of these discussions reveal a titanic clash of styles.
One executive from Ontario Teachers’ Pension Plan testified in a sworn affidavit that when asked for her business plan, Liu said she was “not allowed to share it” until they struck a deal — after which the pension executives walked out while Liu tried to block the door.
At another meeting, executives inquired about Liu’s progress in securing inventory for her proposed store network. She replied: “Relax, lay back and do not worry,” according to a statement filed in court by a vice-president from the real estate arm of Ontario Municipal Employees Retirement System.
For her part, Liu said she believes the landlords always opposed her tenancy because the underlying real estate is more valuable for development than as department stores.
The case is back before the court Thursday. Whatever the judge decides, the saga has added a notable postscript to the history of North America’s oldest corporation.
Granted its charter by the British crown in the 17th century, Hudson’s Bay evolved from a fur trader that facilitated European settlement in North America into Canada’s most iconic department store chain.
Now, the battle for its afterlife is pitting the personalized entrepreneurship that made Liu rich in China against the business-school polish of Canadian real estate executives. The result has seemingly been mutual incomprehension. But what the two camps are really arguing about are the changes to the retail business that sunk Hudson’s Bay after 355 years, and how best to adapt.
“Unlike many, I do not regard in-person shopping as a dying industry,” Liu said in her submissions to the court. “The landlords’ concerns are misguided and suggest that I am not prepared to do what is necessary to make the venture successful.”
A spokesperson for Liu declined a request for an interview. The property arm of Omers declined to comment while the matter is before the court, and a spokesperson for Ontario Teachers’ did not respond to an email requesting comment.
The circumstances that tipped Hudson’s Bay into liquidation include factors that killed storied names like Eaton’s and Lord & Taylor in Canada and the US. Increased competition from e-commerce and from specialized retailers led to declining foot traffic, which then collapsed during the Covid-19 pandemic and didn’t recover anywhere fast enough amid the spike in inflation that followed.
Liu emerged this year with a plan to turn the tide. Born in 1966 in northeastern China, she started her first business, a clothing wholesaler, when she left school at 16 to help support her family, according to a court submission.
After moving to the boomtown of Shenzhen in southeastern China, she began investing in commercial real estate and developed a mall, Yijing Central Walk. After moving to Canada, Liu and her brothersold that mall in 2019, and she and her family began buying properties in British Columbia.
When Hudson’s Bay filed for court protection from creditors in March, Liu saw another opportunity to deploy her fortune. Initially she wanted to bid for the stores’ intellectual property as well as the leases, which would have allowed her to operate under the Hudson’s Bay brand.
But when big-box retailer Canadian Tire Corp. CTC.A +2.10% ▲ beat her to the trademarks, Liu went after 25 HBC store leases, which she won in late May, promising to give C$69 million to the defunct company and its creditors, and then spend C$375 million to reopen the stores. She spent another C$6 million buying the leases of the Hudson’s Bay stores at the three malls she owned herself.
But then she met with her prospective landlords. These included some of the biggest investors in Canada, including the real estate arm of the Caisse de Depot et Placement du Quebec, real estate firm KingSett Capital Inc. and a pair of public real estate investment trusts. That’s when the opposition began.
The landlords’ main complaint after these meetings was Liu’s lack of a detailed plan. Hudson’s Bay stores were typically the largest tenant in a shopping center, so the spaces can make or break the whole property’s success. But the mall owners said they did not come away with any of the information they would typically require to accept such an important tenant.
“I believed — and continue to believe — that Ms. Liu was improvising her presentation,” Rory MacLeod, a real estate executive at Ontario Teachers’, said in his affidavit.
Liu later gave the landlords more details, culminating in a business plan at the end of July. But the landlords said many of the targets were unrealistic — from the budget for store repair, to the six-to-12 month timeline for reopening, to the projected sales after that.
The fact that Liu’s chain would be launching under a completely new brand — first she suggested The New Bay, before settling on calling the chain Ruby Liu, after herself — made them more leery.
In social media posts and interviews with Canadian media, Liu shared ideas for the stores that the landlords thought were at odds with their lease terms, including subletting space to run a “mall within a mall,” opening restaurants that might compete with the food court, and introducing children’s playgrounds or exercise studios.
Her statements made the landlords doubt Liu intended to follow through on the department-store plans she was presenting, according to court filings.
“This was a transparent attempt to obtain landlords’ consent for a concept that Ms. Liu had no intention of pursuing given her prior statements,” Teachers’ MacLeod said. “Ms. Liu had no intention or capability of running a department store.”
Liu said she made her statements before formalizing her business plan, and the strategy she presented in court was what she intended. Her team also asserted the real reason for the landlords’ objections was that the leases would become void if her bid was rejected, transferring the stores back to them for nothing.
Canada is in the midst of a housing crunch that’s sparked an apartment building boom, and some of the country’s major mall owners are converting parts of their properties to residential uses. Liu’s supporters contended the landlords wanted the Hudson’s Bay sites to pursue similar redevelopment.
In the years before Hudson’s Bay’s bankruptcy, two of the landlords, La Caisse and the British Columbia Investment Management Corp., paid the retailer tens of millions of dollars to relax lease restrictions and proceed with redevelopment projects at two of their malls, according to submissions by supporters of Liu. The real estate divisions of Ontario Teachers’ and Omers have submitted plans to redevelop a total of four malls at issue in the bankruptcy case, according to the filings.
Amid this back and forth, Liu received a reprimand from the court for emailing the judge directly. In one message, she praised his “grace,” “dignity,” and “quiet but commanding presence,” and asked, “Is this what I have read of in books — true nobility?” before recounting her own life story.
Last week, the court-appointed monitor for the bankruptcy process recommended rejecting Liu’s application to buy the leases, meaning the real estate would revert to the landlords. Liu’s plan to launch a new national chain had little chance of success given neither she nor her team had experience in the retail business directly, it said, and another failure would hurt the malls and their owners.
Ultimately, the judge will decide. In a response to the monitor’s recommendation, Liu said she’s in the process of hiring executives, including former Hudson’s Bay staff, to lead the stores, as well as a consultant to stock them. She said it’s unreasonable to expect these contracts to be signed when she doesn’t know if she’ll get the stores, and that her time building and running malls counts as retail experience.
And if the project costs more than she has already committed, Liu said she’s prepared to spend it.
“I would not have undertaken this process, expended the time and several million dollars that I have to date, committed my considerable wealth going forward, and proceeded despite the objections of the landlords if I was not fully prepared to fund this venture,” she said in her court filings. “I have no intention to invest C$400 million into a business and then have it fail.”