Hudson’s Bay Responds to Major Lender in Legal Battle
A recent court filing by Hudson’s Bay’s CFO counters the lender’s claims of mismanagement during the liquidation process and the pursuit of a lease sale deal. Michael Culhane argues that the lender, Hilco Global, is unjustly criticizing the retailer for issues that were foreseeable and partly influenced by Hilco’s own actions.
Hilco, which owns the Bay’s lead liquidator and is a significant lender through Restore Capital, has raised concerns about Hudson’s Bay’s handling of the sale of 25 leases. Culhane contends that many of the challenges pointed out by Hilco were either directly caused by Hilco’s actions or were foreseeable outcomes of processes in which Hilco participated.
Last December, Restore Capital was part of a lending group that provided $151.4 million to Hudson’s Bay. It recently accused the retailer of misusing collateral by pursuing a deal with Ruby Liu, a billionaire from British Columbia, to acquire several leases.
Despite objections from landlords regarding Liu’s lack of a detailed business plan, Hudson’s Bay announced its intention to proceed with the deal. Restore Capital plans to challenge the agreement in court, emphasizing the financial risks it poses to lenders if the deal falls through.
Culhane defends the sale to Liu, highlighting the potential financial gains it could bring to lenders. He also mentions other upcoming transactions, including an auction of the retailer’s art and artifacts, that could benefit creditors.
The legal battle also involves a dispute over the appointment of a monitor to oversee Hudson’s Bay’s operations. While Restore suggests a new receiver, Culhane argues against it, pointing out that Hilco was actively involved in the liquidation process and had significant control over sales strategies.
Key issues during the liquidation included lower-than-expected sales of fixtures, delays in sales, and insufficient discounting strategies. Culhane attributes these problems to various factors, including the syndicate’s handling of the process and the failure to meet sales targets.
The ongoing legal clash underscores the complexities surrounding Hudson’s Bay’s financial restructuring and the differing perspectives of stakeholders involved in the process.
