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Three leases in malls she owns were already transferred to Liu, but a who's who of Canadian landlords are fighting the sale of 25 more for about $69.1 million. 

The group, including Cadillac Fairview, Oxford Properties and Ivanhoé Cambridge, don't want Liu to be able to make the purchase because they say the new department store she wants to launch will fail because of her inexperience and insufficient business plan.

Bay lawyer Maria Konyukhova said in court Thursday that the outcome of the case "will have precedential value" for future lease sales. 

At issue is a section of the Companies' Creditors Arrangement Act, the law under which companies, including the Bay, file for creditor protection when they are unable to cope with their debt.

Section 11.3 allows companies to ask the court to assign leases to a potential tenant against the objections of landlords. 

If Judge Peter Osborne sides with the retailer, the move could recoup up to $50 million for the defunct department store's most senior lenders.

In deciding whether to make the assignment, the court has to consider three things. 

The first is whether or not the sale has the support of the monitor, a court-appointed, independent third party which regularly reviews the Bay’s creditor protection. 

The monitor in the Bay’s case, Alvarez & Marsal, has objected to Liu obtaining the leases. Yet the retailer argues that conclusion “should be given little if any weight� because the Liu deal is “the last path to realizing any value for the company’s 98 leases.�

The Bay ran a “robust� sales process to find buyers for its leases. A handful were sold to YM Inc., the owner of various mall brands including West49, and one to a landlord, but no other deal had a higher chance of completion than Liu’s, Konyukhova said.

The second and third aspects the court has to consider under section 11.3 are whether Liu will be able to perform the obligations of the leases she wants and determine if her business is an “appropriate� tenant.  

The landlords have argued the department store Liu envisions won’t meet the terms of the leases. They point to media statements and an early business plan she filed that talked about running a retailer stuffed with dining, entertainment and recreation experiences.

Landlords say these uses aren’t permitted under the Bay’s leases, but Konyukhova said Thursday they aren’t part of her latest business plan and Liu is prepared to take on the leases “as is.�  

Landlords have also taken issue with the timelines and budgets in Liu’s plan. She wants to operate three tiers of store — ranging from flagship to standard locations — and will pour $120 million into renovations. Some of the stores can open within six months of obtaining leases, she argues. 

Landlords say the Bay left the properties it used in such disrepair that the renovations require millions more in funding and significant additional time than Liu has allocated for them.

The repair costs landlords have tallied up are "inflated," Bay lawyer Sinziana Hennig said Thursday. She argued there is little proof Liu will have to spend “vastly more� than she has budgeted and pointed out that the Bay was allowed to keep the leases without making the repairs.

As Hennig and Konyukhova spoke, Liu sat in the courtroom gallery along with a posse of almost 20 staff and supporters. Her entourage was so large that many members were sent to an overflow room. The group was clad in red T-shirts bearing a diamond logo and "Ruby Liu" — the name of the department store she wants to launch.

The proceedings they watched kicked off with Konyukhova saying the landlords' arguments are “misguided but totally logical� when you take into account how much they will gain, if the deal fails.

If Liu doesn't get to buy the leases, landlords will get their properties back. They will be able to hike rent prices from the low levels the Bay paid and even redevelop properties for other uses.

While the Bay might have been a languishing business landlords were anticipating would collapse, Konyukhova said Liu represents "a fresh slate."

She not only has zero debt, unlike the Bay, but has significant capital and will easily be able to get more, the lawyer maintained.

She has also committed to paying a year of rent upfront, which was something the Bay never provided.

This report by °µÍø½ûÇø was first published Aug. 28, 2025.