TORONTO - Hudson鈥檚 Bay is firing back at one of its biggest lenders.
A new court filing from the defunct department store鈥檚 chief financial officer pushes back on the lender鈥檚 calls to subject the retailer to more oversight because it allegedly mishandled its liquidation and is hopelessly pursuing a deal to sell 25 of its leases.
In the documents, Michael Culhane says it鈥檚 鈥渘either fair nor credible鈥 for Hilco Global to criticize the retailer for 鈥渕atters that were foreseeable, inevitable and/or, in many instances, driven by or contributed to by Hilco鈥檚 own conduct and commercial decisions."聽
Financial services firm Hilco owns the Bay鈥檚 lead liquidator Hilco Merchant as well as Restore Capital, one of the retailer's major lenders.
鈥淚ndeed, many of the results about which Hilco now complains are a direct consequence of Hilco鈥檚 own actions taken in its various capacities or were outcomes Hilco knew or should have known could occur when Hilco agreed to and participated in the various processes that it now criticizes,鈥 Culhane says in an affidavit filed to the Ontario Superior Court on Sunday.
Restore Capital was among a group that loaned the Bay $151.4 million last December. It accused the retailer last week in a court filing of frittering away lenders鈥 collateral by pushing a deal to sell about two dozen leases to B.C. billionaire Ruby Liu.
Liu, who owns three malls, wants the 25 properties in Alberta, B.C. and Ontario to open a new department store named after herself. She has already bought back leases to three properties at her own malls used by the Bay and its sister Saks business for $6 million.
However, landlords have objected to her buying their leases because they say she has not provided a sufficient business plan, despite the Bay announcing its deal with her on May 23.
Restore said last week that it will ask a court on Tuesday to terminate the deal, which still needs landlord and court approval. On Saturday evening, it filed more documents bolstering its arguments and calling the Liu deal the 鈥渕ost striking鈥 example of why its confidence in the Bay鈥檚 management 鈥渉as fully unraveled.鈥
It said the 鈥渋llusory鈥 deal is a 鈥渕isadventure鈥 that is costing Restore and other lenders millions in rent and professional fees, which may increase the longer the Bay waits to seek court approval for the transaction.
鈥淚f the transaction fails, no proceeds will be realized and the astounding costs incurred, and to be incurred, in its pursuit, will never be recouped,鈥 Restore warned.
Culhane maintains the sale should move ahead because it will generate 鈥渟ignificant鈥 cash and the retailer doesn鈥檛 have any alternative transactions with a higher prospect of completion.
Court documents show Liu made a deposit of $9.4 million, which would equate to a purchase price of $94 million for 25 leases.
Culhane says lenders stand to reap the rewards of the Liu deals, another unspecified lease transaction the company will seek approval for at the end of July and an auction the Bay plans to hold to sell its art and artifacts.
He also revealed the company thinks its lenders will eventually be paid in full because it is pursuing creditor access to a surplus from its employee pension.
Culhane, who doubles as the Bay鈥檚 chief operating officer, used the remainder of his affidavit to fight Restore鈥檚 push to remove the Bay's board of directors and expand the powers of Alvarez and Marsal, the monitor previously appointed to guide the Bay through the creditor protection process.
If the court doesn't agree to a "super monitor" arrangement, Restore suggested appointing Richter Consulting Inc. as a receiver.聽
Restore said this is necessary because the Bay bungled its liquidation by failing to close stores properly and remove fixtures and equipment.
But Culhane argues the Bay is properly governed and points out that Hilco, along with Gordon Brothers, Tiger, the GA Group and SB360 Capital, formed a syndicate to run the Bay鈥檚 liquidation after the retailer filed for creditor protection in March.
That syndicate meant Hilco 鈥 Restore's owner 鈥 was involved in the liquidation on a daily basis. It had supervisory staff at each of the Bay鈥檚 stores and the syndicate had sole discretion to determine the timing and pricing for furniture, fixtures and equipment sales. Syndicate members were also eligible to receive a 15 per cent cut of these sales.
Culhane said Hilco projected sales of the fixtures would reach about $17 million, excluding sales taxes, but the actual figure was closer to $10.7 million.聽
It attributes the $6.3 million shortfall to the delayed start and shorter timeline for sales, the extended use of fixtures to display goods late into the process and the failure to secure buyers who wanted large quantities of products. 聽
Another key factor was the failure to discount furniture, fixtures and equipment 鈥渁ppropriately and aggressively鈥 to ensure sales, despite the Bay's repeated requests for greater discounting, Culhane said.
This report by 好色tvwas first published July 14, 2025.
