TORONTO — Cadillac Fairview has expressed strong opposition to a proposal from a British Columbia billionaire, Ruby Liu, who aims to take over 25 former Hudson’s Bay leases. The company argues that Liu's plan lacks commercial viability and should not be approved by the court. In documents filed with the Ontario Superior Court on Saturday, Cadillac Fairview stated it is "resolutely opposed" to Liu becoming a tenant at its malls due to the absence of a detailed and credible business plan.

Rory MacLeod, Cadillac Fairview’s executive vice-president of operations, described Liu's business as "an empty shell" without any assurance of financial stability. He stated in an affidavit, "All of the indications are that (her company) will run out of money before the first store opens."

This dispute has escalated since the Bay announced in May that it had selected Liu to purchase 28 of its leases. While the first three leases were quickly approved and transferred because they were located at Liu's existing malls, the remaining 25 leases have faced significant challenges. These leases encompass some of Canada’s most valuable retail spaces, which were previously leased to the Bay at favorable terms. The Bay had filed for creditor protection in March due to substantial debt.

For instance, court documents reveal that the Bay paid $1.3 million annually for 152,420 square feet at Fairview Mall in Toronto, a fraction of what other tenants would typically pay. After struggling to gain support from most landlords for the lease transfer, the Bay sought court intervention in late July to compel property owners to accept Liu as a tenant.

Liu and the Bay have until next Tuesday to respond to Cadillac Fairview’s claims, with a judge scheduled to hear the case at the end of the month. Liu has expressed her intention to transform the Bay stores into a department store named after herself, incorporating not just retail but also dining, entertainment, and recreational areas.

MacLeod noted that Liu has proposed adding grocery stores, educational centers, senior facilities, and performance spaces to the Bay locations. However, Cadillac Fairview contends that the leases for the six malls Liu is targeting — Fairview Mall, Sherway Gardens, Masonville Place, Markville in Ontario, Market Mall, and Chinook Centre in Alberta, as well as Richmond Centre in B.C. — only permit the operation of department stores.

"Despite her private assurances that she intends to respect the lease terms, Ms. Liu has consistently presented a different idea to the public, one that would not be compatible with the leases," MacLeod stated.

Concerns have also been raised regarding Liu's proposed timelines and budget. She has claimed she can open at least 20 stores within 180 days of acquiring the leases, with plans to invest $120 million in necessary repairs and $135 million in initial inventory. Cadillac Fairview has labeled this timeline as "entirely unrealistic" for a new brand and criticized the funding as inadequate given the extensive repairs needed.

MacLeod estimates that the stores will require over $15.8 million in repairs by the end of 2026 to meet lease requirements, with an additional $5.7 million needed by 2027, excluding taxes and permits. Over the next decade, he anticipates Liu will need to invest at least $43.1 million on the Cadillac Fairview leases alone.

Additionally, MacLeod questioned Liu's staffing projections, which indicate a need for 1,800 employees. He pointed out that if all were sales staff, only 64 employees would be available on the sales floor of each of her 28 stores, which he deemed "inadequate to support a countrywide chain" and "inconsistent with a retail location even a fraction of that size."

"With my decades of experience in commercial real estate, it is apparent to me and Cadillac Fairview that (Liu) will fail and again leave these stores vacant," MacLeod concluded.