Hudson's Bay store leases in Nanaimo, Victoria and Tsawwassen are expected to be the first to transfer to new ownership this summer.
Hudson's Bay Company, as part of its creditor protection process, is now seeking court approval to initiate a previously announced agreement to assign leases at Woodgrove Centre, Mayfair Shopping Centre and Tsawwassen Mills to Central Walk, which owns the three malls.
Last month in companies' creditor arrangement act proceedings in Ontario Superior Court, Central Walk entered into an agreement to take over up to 28 Hudson's Bay store leases in B.C., Alberta and Ontario, with mall ownership stating that "the store locations will be transformed into modern department stores."
Documents filed as part of the court proceedings this month show more details of the lease monetization process. Ruby Liu Commercial Investment Corp., an affiliate of Central Walk, will pay $2 million for each of the three lease assignments at its malls, for a total of $6 million. The deal is expected to be finalized by the end of July.
Michael Culhane, chief operating officer and chief financial officer of Hudson's Bay Company, in a sworn affidavit, said the sum being paid by Central Walk for the leases is "fair and reasonable and represents the highest and best offers received."
In providing background, he said the Hudson's Bay Company department store chain suffered "severe liquidity issues" due to a decline in foot traffic at stores in a "deteriorating brick-and-mortar retail environment," and pointed to the COVID-19 pandemic as a contributor. He also mentioned trade tensions with the United States. In March, the Bay was granted creditor protection under the CCAA.
A press release last month from Central Walk, after signing the lease agreement for up to 28 stores, stated that the transaction "underscores the group's deep commitment to the Canadian retail industry and represents a significant achievement in its ongoing strategic expansion." The mall owner indicated that former Bay employees will be prioritized in the hiring process and that relationships will be preserved with past Hudson's Bay vendors and suppliers.
The stores will not continue to operate as Hudson's Bay stores, as Canadian Tire acquired the Hudson's Bay Company name, iconic stripes, and other designs, logos and brand trademarks earlier this spring as part of the CCAA process. Accordingly, the store's new name, according to the court, must be "dissimilar to, and cannot be confused with" Hudson's Bay Company, Hudson's Bay, HBC or any variations.
