US fashion retailer Dillard’s to buy Nygard inventory and brand

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US fashion retailer Dillard’s has struck a deal with companies owned by Canadian designer Peter Nygard, and it includes buying inventory to sell in its luxury department store chain.

Dillard’s, which has nearly 300 stores in the United States, dropped Nygard in February after the FBI raided its New York headquarters and California home in connection with a sexual assault investigation. It also refused deliveries, canceled all existing orders and suspended future purchases from the company.

At the time, a Dillard spokesperson said the serious allegations about 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. won an emergency hearing in Manitoba’s Court of Queen’s Bench because it said Dillard’s deal would be thrown out if not approved by the end of the day. Judge James Edmond came while on vacation to hear arguments on the matter.

Edmond approved of the deal 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, so long as it is available for pickup on or before July 3. Dillard’s also buys the Allison Daley brand and inventory, which it sells in its department stores, for a set amount.

Details of the purchased inventory and its high cost have been sealed by the court as 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 was essential to the business, accounting for more than 67% of the Nygard Group’s total wholesale sales. Dillard had a working relationship with Nygard for over 20 years and sold Nygard products under various brand names including Allison Daley, Investments and other Nygard owned brands.

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

A Nygard property on Winnipeg’s Notre Dame Avenue, as seen in a photo from April 29, 2020. The court heard the property sold for significantly less than the asking price of $5.2 million. Four properties in Winnipeg and Toronto have been put up for sale after nine Nygard-owned companies went into receivership. (Jeff Stapleton/CBC)

Potential buyers contacted

The receiver hired a consultant who contacted more than 275 potential buyers, including large retailers, off-price channels and smaller private companies to see if any would buy Nygard Group’s wholesale inventory.

In the wake of the COVID-19 pandemic, retailers already had an oversupply of clothing that they are now selling at a discount, according to the report.

Richter also said association with the Peter Nygard brand amid sexual assault allegations has made it difficult to sell available inventory.

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.

Nonetheless, the receiver said that prior to the settlement agreement with Dillard’s, the US retailer sought compensation for financial losses it suffered in association with the Nygard brand.

“Dillard alleged that [Nygard International Partnership] owed Dillard’s a substantial net unliquidated amount which Dillard believed would worsen over time, generally resulting from damage to Dillard’s image and reputation based on its association with the “Nygard” and public allegations made against Mr. Peter Nygard,” the catcher’s report said.

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 claims his client lived in an apartment inside the warehouse and cannot be evicted due to the COVID-19 pandemic. Judge James Edmond denied this request. (Affidavit of Greg Fenske filed in the Manitoba Court of Queen’s Bench)

Judge denies Nygard’s rental applications

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

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

Last week, Nygard said he had lived in an apartment on the Notre Dame property for a year and a half and argued he could not be evicted due to changes to residential tenancies law in light of the COVID-19 pandemic.

The judge denied Nygard’s claims, saying that if he had been a tenant he would have been able to provide evidence, but did not.

“There is no evidence of a written rental agreement, lease term, rent paid, renewal terms, utilities, repairs, warranties or security deposit paid or any other term generally accepted by parties entering into residential lease agreements,” Edmond said.

He said that while it was possible they made a verbal agreement, documents such as emails, expense reports or other documents should have been produced as evidence.

Edmond concluded that Nygard was authorized to use the apartment in his role with the Nygard Companies, as his home was in the Bahamas and therefore had no rental rights.

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