Sale of Nygard property delayed after lawyer says designer can’t be evicted from apartment during pandemic

By | June 25, 2020

Fashion designer Peter Nygard’s lawyer says his client’s tenancy rights must be considered if the Manitoba Court of Queen’s Bench plans to approve an offer to purchase a property on Winnipeg’s Notre Dame Avenue owned by Nygard companies in receivership.

The property at the corner of Notre Dame and Clifton Street includes three buildings, one of which was a Nygard clothing store. It is one of four in Winnipeg and Toronto currently up for sale.

Wayne Onchulenko told the court via teleconference Thursday that Peter Nygard was living in an apartment inside one of the buildings on the 4.6-acre property, and cannot be evicted during the COVID-19 pandemic. 

In April, the Manitoba Government amended The Residential Tenancies Act to suspend evictions and rent increases during the pandemic. The order has since been extended until Sept. 30. 

“What’s missing before this court is the application by the receiver, before the Residential Tenancies Board to have Mr. Nygard removed as a tenant or found to not be a tenant,” said Onchulenko.

Nine Nygard companies went into receivership on March 18 after American lenders White Oak Commercial Finance and Second Avenue Capital Partners took them to court to recoup a loan worth more than $25 million US. Richter Advisory Group Inc. was appointed receiver of the nine companies.

Onchulenko says since then there have been numerous discussions regarding Nygard’s desire to formally rent the apartment, but the receiver has refused.

“It’s been no secret that Mr. Nygard from March 18 onward has taken the position that he was a tenant at 1340 Notre Dame Ave. … and continues to say that he would be happy and fully prepared to pay fair market value rent for those premises.”

Photos of the Notre Dame Avenue executive suite were included in an affidavit filed in the Manitoba Court of Queen’s Bench in March by former Nygard employee Greg Fenske. Peter Nygard’s lawyer now says his client was living in an apartment inside the warehouse and can’t be evicted because of the COVID-19 pandemic. (Affidavit of Greg Fenske filed in Manitoba Court of Queen’s Bench)

Richter says there is no evidence that Nygard was an official tenant and therefore has no tenancy rights to the apartment.

Mr. Nygard’s use of those premises was an accommodation in relation to his employment or ownership of the Nygard entities,” said Richter’s lawyer Bruce Taylor. “There’s no lease, there’s no tenancy, there’s no rent, and all of the costs of that residence were paid by the company.”

A former Nygard employee filed an affidavit on Nygard’s behalf claiming Nygard’s rights to the apartment, but Justice James Edmond said that’s not good enough.

Justice Edmond says Nygard is currently in Manitoba and that he should be the one giving the evidence, not his former employee.

“There’s no doubt that it’s hearsay evidence. And it’s unclear to me as to why Mr. Nygard wouldn’t swear the affidavit saying he’s the tenant and what the terms of this tenancy agreement are,” said Justice Edmond.

He has given Onchulenko until 5 p.m. CT Friday to get his client file an affidavit and provide evidence he has a tenancy right to the apartment. 

Nygard is the subject of a civil class-action lawsuit in New York, filed by 57 women who say they were raped or sexually assaulted by him.

Nygard denies the allegations and none have been proven in court. No criminal charges have been filed.

Purchase offer below asking price

Richter is asking the court to approve a purchase offer on the Notre Dame Avenue property, which has been on the market for six weeks. 

In April, the receiver hired Colliers, a commercial real estate company, to help sell four Nygard-owned properties. They reached out to 350 prospective buyers. Only four were interested enough to take a look at the Notre Dame buildings. 

Richter says it has received two offers on the property. One is significantly less than the $5.2 million asking price, but has no conditions, even though about $750,000 will be required to complete environmental remediation. 

The second offer is higher but is based on numerous conditions, including securing financing, zoning, and final approval by the company’s board of directors. On top of that, the prospective buyer is asking for a 45-day period to complete due diligence investigations on the property.

There are five apartments inside the Notre Dame Avenue warehouse. This photo of the executive suite was filed in Manitoba Court of Queen’s Bench. The property is one of four in Winnipeg and Toronto owned by Nygard companies in receivership that are up for sale. (Affidavit of Greg Fenske filed in Manitoba Court of Queen’s Bench)

All of those factors led the receiver and Colliers to the conclusion that this was not an offer that was worth pursuing, or worth risking the [first] transaction over,” said Taylor.

Still, Nygard’s lawyer says the court should give the second offer a chance.

“What’s the rush … given these COVID conditions, which everyone agrees are at best uncertain and at worst have depressed the value of these properties,” Onchulenko said.

The lawyer for American lenders White Oak, the only secured creditor, says since the receivership began, his client has paid an additional $8.9 million to fund Richter’s efforts to liquidate company assets.

“The lenders are actually more in the hole than they were when this proceeding started, and the entire purpose of this proceeding is to pay down the loan,” said White Oak lawyer Jeremy Dacks.

White Oak wants the receiver to accept the first offer and move on with the process.

There is retail space on the Notre Dame Avenue property. The receiver’s third report to the Manitoba Court of Queen’s Bench says liquidation sales have begun in Manitoba and other provinces. (Affidavit of Greg Fenske submitted to Manitoba Court of Queen’s Bench)

“The receiver has a job to do now,” said Taylor. “The circumstances of the market are what they are, and none of us know whether or not in a month or two months prices will be better or worse.”

Taylor said Peter Nygard made a verbal offer to buy the Notre Dame Avenue warehouse in March but it wasn’t accepted.

Justice Edmond is expected to give his decision on the receiver’s request to approve the purchase offer next week.

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