As Hudson’s Bay Faces Lease Deadlines, Signs of Hope Emerge

Time is running out for two impending deadlines that may shape the future of Hudson’s Bay.

Prospective buyers interested in acquiring Canada’s oldest company or assets like the rights to its legendary Stripes brand must submit binding proposals by Wednesday at 5 p.m. Those looking to acquire leases held by the 355-year-old department store chain or its sister Saks businesses need to finalize their bids by Thursday.

These efforts were initiated after Hudson’s Bay sought creditor protection in March, citing significant financial challenges due to the COVID-19 pandemic, dwindling downtown traffic, and an escalating tariff war.

The company, now in liquidation, believed that offering itself and its leases for sale could uncover a path to survival or, at the very least, secure a future for its most valued assets.

While Hudson’s Bay and its sales overseers have not disclosed whether any formal offers have been made for the business or its non-lease assets, Adam Zalev, managing director at financial adviser Reflect Advisors, indicated there has been “a high level of interest.”

A source familiar with the situation, who spoke on the condition of anonymity, mentioned that a mix of well-known North American businesses and financial partners have shown interest.

One of the interested parties could be Weihong Liu, the Chinese billionaire who owns three shopping centers in B.C. through her investment firm, Central Walk.

Liu has expressed on social media her desire to purchase stores in order to “restore The Bay to its glory.” However, she has not held the anticipated press conference to present her bid, and her assistant, Linda Qin, a B.C.-based real estate agent, has refrained from confirming whether they are still pursuing an offer.

There are also suggestions that a member of the current management might submit a bid.

This speculation arose after an “insider protocol” document was shared with lawyers earlier this month. The document outlined how the sales process would maintain “integrity and fairness” and was implemented “in light of a potential insider bid that may involve certain unnamed members of management.”

Although the document stated there are “no assurances” a management bid would be forthcoming, it was circulated after a deadline for management to express interest, which was April 7.

QE Home, a Burnaby-based bedding business, is not an insider but considered bidding for the Stripes brand until it sensed that rights to the motif would likely be included in a broader asset sale.

“If someone does acquire that block and there remains an opportunity to help carry on their legacy, we’d be eager to have discussions,” remarked Christina Xu, the company’s chief operating officer.

Such secondary discussions would likely await the outcomes of any bids considered by Hudson’s Bay and the firms managing the sale. If multiple offers are received for the assets, an auction could be held around May 16, with court approval sought by May 30. This would be separate from another auction the company is running with Heffel Gallery to sell its art, artifacts, and charter.

While the precise number of bids Hudson’s Bay is likely to receive remains uncertain, the process for monetizing its leases appears to be showing more encouraging signs.

An April 22 court filing revealed that 18 unnamed parties submitted letters of intent, expressing interest in a total of 65 leases.

Several of these parties attempted to secure multiple leases, and some interested parties are landlords, as noted in the document. Landlords frequently bid on their own leases during such circumstances to gain greater control over tenant placements.

The court filing indicated that some parties filing letters of intent are also interested in other Hudson’s Bay assets being offered in the sales process, although specific interests were not disclosed.

Companies seeking Bay properties might need to adhere to the same terms that the retailer agreed to when securing its leases. These terms may require any leaseholder to occupy the entire property, possibly designating the occupant as a department store, which could limit the pool of qualifying companies.

Thirty-six of the company’s leases did not receive any bids and are likely to revert to landlords once liquidation sales conclude by June 15.

“As the bid deadline approaches in the sales process, the strong sales at the stores reinforce the resilience of the Canadian consumer and their eagerness to support Hudson’s Bay, a beloved Canadian institution,” Zalev noted.