Nygard companies fight court-appointed receiver on authority to sell Inkster property

While Peter Nygard remains in a Winnipeg jail awaiting extradition to the U.S. on allegations of rape and sex trafficking, lawyers for one of his companies are now fighting a different battle in a Manitoba court.

Nygard Properties Ltd. wants the province's appeal court to discharge the receiver appointed to liquidate the assets of nine Nygard companies, including Nygard Properties.

Doing so would quash the sale of 1771 Inkster Blvd. — a Winnipeg property owned by Nygard Properties. Its sale is set to be finalized Jan. 18.

"My client wants its property. It wants its real property. It doesn't want the privilege of fighting over a pile of cash," said Colby Linthwaite, a lawyer for Nygard Properties, via teleconference Thursday.

The Nygard Group of companies owed $50 million to creditors, including nearly $30 million to American lender White Oak Commercial Finance, when it was placed under receivership in March by Manitoba Court of Queen's Bench Justice James Edmond.

Nygard Properties says the debt to White Oak — the only secured creditor — has since been repaid, and so the receiver has no authority to sell any more of its property. 

Lawyers for the receiver, Richter Advisory Group, say White Oak is still owed $700,000 and that its job isn't just to ensure that is paid in full, but that other creditors are also paid.

"All we're doing here is turning a building that has no unique characteristics into cash," said Richter's lawyer Bruce Taylor. 

Richter said the Nygard Group tried the same argument in front of Justice Edmond in November and lost. Now they're trying their luck in the appeal court, the receiver's lawyer said.

"They think they found an avenue to pull their property out of this proceeding, get the receiver discharge and not any longer feel the need to benefit those creditors, but instead benefit the owners of NPL, which is ultimately Mr. Nygard," said Taylor.

'Cleanup tasks' remain for receiver: lawyer

Nygard Properties Ltd. says Richter sold two out of four properties it owns in order to pay White Oak $19.6 million. The company argues that means it should not be on the hook to pay creditors of a different Nygard company, Nygard International Partnership.

"We are not saying the receiver should clean out his desk, so to speak, and be gone by Monday afternoon. We appreciate that there are, let us call it, cleanup tasks that the receiver is going to have to do in order to bring this to a tidy end," said Linthwaite.

"We do object to property being liquidated after the applicant lenders been paid and the cost of the receivership can be justified."

Taylor said throughout the receivership, it's been clear that the Nygard Group intermingled its business, and there's no way to separate one company from the other.

"These entities were run for a common purpose, as a common enterprise," said Taylor. 

Richter is asking the Court of Appeal to lift a stay of proceedings which was triggered when Nygard Properties appealed Edmond's decision to allow the Inkster sale.

Taylor told Justice Janice leMaistre the property has been on the market since April, and the offer set to finalize next month is the only one the receiver has seen.

"If you don't close this deal in the course of the agreement, the purchaser is in a position to walk from this agreement," said Taylor.

The agreement was hard fought, he said, because of significant issues with the building that had to be addressed before the buyer would agree to the purchase. 

Justice leMaistre has reserved her decision. No date has been set to hear the appeal.

Nygard in custody

Peter Nygard was taken into custody on Monday, meanwhile, on criminal allegations dating back decades.

The 79-year-old faces a nine-count indictment in the United States on charges of racketeering, sex trafficking and related crimes.

The charges relate to "a decades-long pattern of criminal conduct involving at least dozens of victims in the United States, the Bahamas, and Canada, among other locations," according to the U.S. Attorney's Office for the Southern District of New York.

Those charges have not been proven in court.

Justice Sheldon Lanchbery said Monday that Nygard will be held at the remand centre in Winnipeg until his next court appearance on Jan. 13, but the former fashion mogul's lawyer said he would apply for bail for his client before that date.