Nygard liquidation sale dates pending while court rules on unpaid rent

Manitoba Court of Queen's Bench will rule on the receiver's latest request — regarding a "landlord charge" — on Tuesday.

COVID-19 retail shutdowns delayed store closing sales, court now considering a 'landlord charge'

Receiver Richter Advisory Group Inc. says it has received conditional offers of purchase for three Nygard properties including the Nygard International Partnership building on Niagara Street in Toronto (pictured), the Winnipeg headquarters on Inkster Boulevard, and the properties on Notre Dame Avenue. (Michael Wilson/CBC)

The liquidation of assets belonging to nine companies owned by fashion mogul Peter Nygard is underway, but dates can't be set for store closing sales to begin until Manitoba's Court of Queen's Bench approves the receiver's latest request.

The Nygard companies have been in receivership since March 18, and remain under the control of Richter Advisory Group Inc.

On Monday, Richter's lawyer said the COVID-19 pandemic resulted in the closure of all 165 of Nygard's retail stores in Canada and the U.S., which prevented the receiver from holding liquidation sales and resulted in approximately $2.7 million in unpaid rent.

"A solution has to be arrived at to address the matter of who bears the burden of the fact that the government, by reason of the pandemic, effectively shut down retail store operations," said Richter's lawyer Bruce Taylor via teleconference during a court hearing Monday morning.

Taylor said while no one is to blame for the situation, the receiver and the landlords have come to an acceptable solution.

"We've created a charge in favour of landlords. It's a compromise," said Taylor.

Richter will pay rent for the duration of the upcoming liquidation sales, and to compensate store owners for their loss in revenue, the receiver is proposing a "landlord charge" which will be determined by each landlord. 

"It's a co-operative solution, my lord, to a very unique set of circumstances, very challenging set of circumstances," said Taylor. 

He said the charge will "provide some security to the landlords for the payment of back rent in priority to all other interests," similar to other unsecured creditors.

Companies owe $50 million

The Nygard companies owe nearly $50 million to approximately 350 creditors around the world, including 40 Manitobans, according to a list in the receiver's first report. 

American lender White Oak Commercial Finance is the only secured creditor guaranteed to get its almost $36 million back once Nygard's assets are sold off.

Peter Nygard and some Nygard companies are named in a class-action lawsuit filed in New York in February, which now includes allegations from 46 women. The women allege Peter Nygard sexually assaulted them. Nygard denies the allegations and none have been proven in court. (Annie I. Bang/The Associated Press)

"We're faced with a unique and difficult challenge of how to address some of the circumstances and outcomes that are presented by the pandemic and by the regulatory responses to the pandemic," said Taylor.

Liquidation sales will be held on a "per store basis" because each jurisdiction has different rules as to when retailers can open in the midst of the COVID-19 pandemic, and the duration of the sales won't exceed 16 weeks, Richter says.

Last month Richter said it was concerned the value of Nygard's inventory was deteriorating, in part because of a class action lawsuit filed in New York in February, which now includes allegations from 46 women who claim Peter Nygard sexually assaulted them.

Nygard denies the sexual assault claims and none have been proven in court.

Nygard's lawyer opposes charge

The lawyer for Peter Nygard, and two Nygard companies that are not under receivership, are opposed to the landlord charge. 

"The question is whether a priority charge over nine debtors, eight of which are not the tenant, is an appropriate remedy to preserve and protect the landlord's fees," said Domenico Magisano by teleconference during the Monday morning hearing.

Magisano said the store leases are under Nygard International Partnership, and not the responsibility of the other eight Nygard companies under receivership.

"Any allocation of proceeds must account for the fact that the creditors of the other eight entities are deriving no benefit from this liquidation because both the property is being sold and the leases that are being continued are partnership assets," said Magisano.

"What we shouldn't be doing is prejudicing the stakeholders of one entity so that there's gonna be funding to maximize recovery for another."

Magisano said outstanding rent should be paid to the landlords of two properties in Gardena, California, because the receiver occupied them when it took over in March.

He said as for the retail stores, the receiver hasn't provided any information on which discussions were had.

"We don't even have answers as to whether or not there was any negotiation about what the occupancy plan should be during the COVID-19 period and whether these landlords may be entitled to a partial rebate in a government-sponsored program," said Magisano.

Justice James Edmond will deliver his ruling on Tuesday.

Offers to purchase received

The receiver's second report to the court says Richter has executed conditional agreements of purchase and sale on three Nygard properties: the Toronto headquarters, and the Inkster and Notre Dame properties in Winnipeg. No details were provide about the offers, or what conditions were put on them.

"The Receiver is working with each purchaser to facilitate due diligence efforts to satisfy the relevant conditions," said Richter's court filings.

Richter says once the conditions are met — or waived — it will seek the court's approval to finalize the sales.


Caroline Barghout

Investigative Reporter, CBC Manitoba I-Team

Caroline began her career co-hosting an internet radio talk show in Toronto and then worked at various stations in Oshawa, Sudbury and Toronto before landing in Winnipeg in 2007. Since joining CBC Manitoba as a reporter in 2013, she has won an award for her work on crowded jails and her investigation into Tina Fontaine's death led to changes in the child welfare system. Email: