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

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 approvean offer to purchasea property on Winnipeg's Notre Dame Avenue owned by Nygard companies in receivership.

Wayne Onchulenkotold the court via teleconference Thursday that PeterNygard was living in an apartment inside one of the buildings on the property,and cannot be evicted during the COVID-19 pandemic.

Court heard Nygard who is also the subject of acivil class-actionlawsuit filed in New York is currently in Manitoba,living at his cottage in Falcon Lake. It's not clear when he was residing atthe Notre Dame warehouse apartment.

The the 4.6-acreproperty at the corner of Notre Dame and Clifton Street includes three buildings, one of which was a Nygard clothing store. Itis one of four Nygard properties in Winnipeg and Toronto currently up for sale.

In April, the Manitoba government amended The Residential Tenancies Act to suspendevictions and rent increases during the pandemic. The order has since been extendeduntil 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 wentintoreceivership on March 18 afterAmerican lendersWhite Oak Commercial FinanceandSecond 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 ninecompanies.

Onchulenko says since then there have been numerous discussions regardingNygard's desireto 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."

Richter says there is no evidence thatNygardwas an officialtenant 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, butJustice James Edmond said that's not good enough.

Justice Edmond saysNygard is currently in Manitobaand that he should be the one giving the evidence, not his former employee.

"There's no doubt that it's hearsay evidence. Andit's unclear to me as to whyMr. 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 givenOnchulenko until 5 p.m. CT Friday to get his client to file an affidavit and provide evidence he has a tenancy right to the apartment.

The civil suit filed against Nygardin New York involves57women who say they were raped or sexually assaulted by him.

Nygard denies the allegations and nonehave been proven in court.No criminal charges have been filed.

Purchase offer below asking price

Richter is asking the court to approve apurchase offer on the Notre Dame Avenue property, which hasbeen 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 fourwere interested enough to take alook at the Notre Dame buildings.

Richter says it has received two offers on the property. One issignificantly less than the $5.2 million asking price, buthas no conditions, even thoughabout $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 diligenceinvestigations on the property.

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

Still,Nygard's lawyersaysthe court should give the second offer a chance.

"What's the rush given these COVIDconditions, which everyone agrees are at best uncertain and at worst have depressed the value of these properties," Onchulenko said.

The lawyerfor 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.

"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 warehousein 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.