Harry Rosen borrowed money from the Royal Bank of Canada to provide the initial
funding for the SSI subsidiaries. Harry Rosen pledged certain of its own assets as collateral for
the loan. After the SSI subsidiaries began transacting business, Harry Rosen transferred assets
out of the SSI subsidiaries to satisfy this loan.
In 1999, SSIOO and Old Orchard entered into a lease agreement for retail space at Old
Orchard Mall in which to open the SSIOO Hugo Boss boutique. Specialty Stores
unconditionally guaranteed SSIOO’s payment of its obligations under the lease.
In late 2001, Harry Rosen decided to end operations of the SSI subsidiaries. To resolve
the SSI subsidiaries’ obligations to Hugo Boss, Harry Rosen, which had guaranteed these
obligations under the licensing agreements, sold the majority of the SSI subsidiaries’ assets to
Hugo Boss and agreed to pay the remainder over a certain period of time.
After SSIOO ceased operation of its boutique, Old Orchard sued Specialty Stores in
United States District Court to enforce Specialty Stores’ guaranty of SSIOO’s lease and collect
unpaid rent and other charges. Specialty Stores dissolved roughly a year after Old Orchard filed
the suit but continued to defend the litigation for several months thereafter. At that point,
Specialty Stores’ counsel withdrew, and no new counsel ever appeared. Ultimately, on
September 23, 2004, the federal district court entered a default judgment against Specialty Stores
for $2,706,437.48. However, because Specialty Stores had no assets at that time, it was unable to
satisfy the judgment.
Thus, Old Orchard articulated two counts in its complaint against Harry Rosen in the
present action. In count I, Old Orchard sought a declaratory judgment that HRUSA, Specialty
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