American fashion retailer Dillard's to purchase Nygard inventory, trademark

American fashion retailer Dillard's has reached a settlement with companies owned by Canadian designer Peter Nygard, and it includes buying inventory to sell in its chain of luxury department stores. 

Dillard's, which has nearly 300 stores in the U.S., dumped Nygard in February after the FBI raided his New York headquarters and California home as part of a sexual assault investigation. It also refused deliveries, cancelled all existing orders and suspended future purchases from the company.

At the time a Dillard's spokesperson said the serious allegations concerning Nygard were in direct opposition to the company's "core values."

Nine Nygard companies have been in receivership since March 18. 

On Tuesday, receiver Richter Advisory Group Inc. was granted an emergency hearing in Manitoba's Court of Queen's Bench because it said the Dillard's agreement would be off the table if not approved by day's end. Justice James Edmond came in during his holidays to hear arguments on the matter.

Edmond approved the agreement and found the terms to be "commercially fair and reasonable under the circumstances."

The agreement settles outstanding and potential claims between the Nygard group of companies and Dillard's, as well as the sale of certain inventory, as long as it's available for pick up no later than July 3. Dillard's is also buying the Allison Daley trademark and inventory, which it sells at its department stores, for a fixed amount.

Details of the inventory purchased andits cost much were sealed by the court because they are considered confidential. However, the receiver said it was a good deal for creditors. 

According to Richter's fourth report to the court, Dillard's was critical to the business, accounting for more than 67 per cent of the Nygard Group's total third-party wholesale sales. Dillard's had a working relationship with Nygard for more than 20 years and was selling Nygard merchandise under various labels, including Allison Daley, Investments and other Nygard-owned brands. 

The report says Dillard's owed $6.8 million in accounts receivable and more than $8 million in inventory that had been ordered for Dillard's.

Prospective buyers contacted

The receiver hired a consultant who reached out to more than 275 prospective buyers including major retailers, off-price channels and smaller privately owned businesses to see whether any would purchase the Nygard Group's wholesale inventories, . 

As a result of the COVID-19 pandemic, retailers already had an oversupply of apparel that they are now selling at a discounted price, according to the report.

Richter also said the association to the Peter Nygard brand amid sexual assault allegations, has made selling available inventory challenging. 

Fifty-seven women have filed a class-action lawsuit in New York alleging Nygard sexually assaulted them. Nygard denies the allegations, and none have been proven in court.

Nevertheless, the receiver said prior to the settlement agreement with Dillard's, the American retailer had been seeking compensation for financial loses its suffered in association with the Nygard brand. 

"Dillard's alleged that [Nygard International Partnership] owed Dillard's a net substantial unliquidated amount which Dillard's anticipated would worsen as time passed, generally resulting from damage to the image and reputation of Dillard's based on its connections to the "Nygard" brands and public allegations made against Mr. Peter Nygard," said the receiver's report.

Judge denies Nygard tenancy claims

Edmond also approved the sale of a Nygard owned property on Notre Dame Avenue.  The purchase offer is confidential, but court heard it is considerably lower than the $5.2-million asking price.

Four Nygard properties, including the Toronto and Winnipeg warehouses, have been on the market since April 29. 

Last week, Nygard said he had been living in an apartment on the Notre Dame property for the past year and a half, and argued he couldn't be evicted due to changes to the residential tenancies act in light of the COVID-19 pandemic.

The judge dismissed Nygard's claims, saying if he were a tenant he would have been able to provide some proof, but did not.

"There is no evidence of a written tenancy agreement, a lease term, rent paid, renewal terms, utilities, repairs, securities, or damage deposit paid or any other terms and conditions that are ordinarily agreed to by parties entering into residential tenancy agreements," Edmond said.

He said while it's possible they entered into a verbal agreement, documents such as emails, expense reports or other documents ought to have been produced as evidence.

Edmond concluded Nygard was permitted to use the apartment as part of his role with the Nygard companies, because his home was in the Bahamas, and therefore doesn't have any tenancy rights.