Hudson’s Bay Responds to Lender Criticism in Ongoing Legal Battle
In a recent legal development, Hudson’s Bay is hitting back against a major lender’s attempts to subject the department store to increased oversight. The lender has accused the retailer of mishandling its liquidation process and pursuing a questionable deal to sell 25 of its leases.
Chief financial officer Michael Culhane, in a court filing, disputes the lender’s claims, stating that it is unfair and not credible for them to criticize the retailer. Culhane argues that many of the issues raised were either foreseeable, inevitable, or influenced by the lender’s own actions.
The financial services firm in question, Hilco, owns the Bay’s lead liquidator, Hilco Merchant, and is also a significant lender through Restore Capital. Culhane asserts that the lender’s complaints are a result of their own decisions and actions during the processes they are now criticizing.
Restore Capital, part of a lending group that provided $151.4 million to Hudson’s Bay last year, recently accused the retailer of jeopardizing lenders’ collateral by pursuing a deal with B.C. billionaire Ruby Liu to acquire several leases. The lender is seeking to terminate this agreement, claiming it poses financial risks and lacks a viable business plan.
Despite objections from landlords regarding the deal with Liu, Culhane maintains that proceeding with the sale is crucial for generating substantial cash flow. He highlights potential benefits for lenders from this deal, another upcoming lease transaction, and an art and artifacts auction.
In response to Restore’s push for expanded oversight, Culhane opposes the appointment of a “super monitor” and suggests an alternative receiver. The lender argues that Hudson’s Bay mismanaged its liquidation process, but Culhane points out the involvement of Hilco, among others, in overseeing this operation.
Culhane details discrepancies in projected and actual sales figures for fixtures during the liquidation process, attributing these to delayed sales, prolonged use of fixtures, and insufficient discounting. Despite efforts to enhance sales through discounts, the retailer faced challenges in attracting buyers for bulk purchases.
The legal battle continues as Hudson’s Bay and its lenders navigate the complexities of the ongoing dispute over the company’s financial strategies and decisions.
