May 26, 2020

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Nygard undermined court-appointed receiver, documents show

Hit with a class-action lawsuit last February alleging sex crimes spanning decades, Peter Nygard immediately announced he would step down from the Nygard Group of companies, but documents filed by a court-appointed receiver now suggest he continued to cling to the reins of his floundering fashion empire.

Nygard Group was ordered into receivership March 18 after a judge ruled it had not acted in good faith with its lenders and an insolvency trustee.

JASON HALSTEAD / WINNIPEG FREE PRESS</p><p>“(Peter) Nygard is still in full possession and control of the Nygard facilities and business and there is no right given by the court according to our lawyers that the receivers can come in to our buildings and cut off our communication,” read the email in part.</p>

JASON HALSTEAD / WINNIPEG FREE PRESS

“(Peter) Nygard is still in full possession and control of the Nygard facilities and business and there is no right given by the court according to our lawyers that the receivers can come in to our buildings and cut off our communication,” read the email in part.

According to court documents filed last month, receiver Richter Group, in an effort to preserve company records, moved that same day to restrict access to Nygard Group computer systems.

"As a result, the system access rights of certain (now former) Nygard Group team members, including Peter Nygard, were terminated," Richter said in an April 20 report to the court.

The next day, at 1:26 a.m., a mass email was sent to Nygard Group employees from a still active email account "on behalf of Mr. Nygard, calculated to undermine the receiver’s authority and interfere with the receiver’s court-ordered duties and responsibilities," Richter alleged.

"Nygard is still in full possession and control of the Nygard facilities and business and there is no right given by the court according to our lawyers that the receivers can come in to our buildings and cut off our communication," read the email in part. "Some misguided individuals have been communicating on behalf of Richter with the wrong message."

Records showing two directors and five employees rang up $185,000 in "potential personal expenses" on corporate credit cards one week before Nygard Group went into receivership also suggest Nygard continued to hold decision-making authority.

Richter was made aware of the corporate credit cards the day Nygard Group went into receivership and immediately requested detailed transaction records from card-issuer BMO.

"Upon receipt of the transactional data, the receiver noticed that there was a material increase in expenditures on certain of the corporate cards in the week immediately preceding the granting of the receivership order," Richter said in court documents. "As part of its review, the receiver noted numerous expenses which appeared to be personal in nature and unrelated to the debtor’s operations."

Expenditures included $9,412 on groceries, $13,277 on consumer electronics, $28,698 on pre-paid gift cards and $15,306 on cash advances.

Richter wrote to each employee requesting explanations, supporting documents and proof the expenses had been authorized.

"Each of (the six) employees that provided responses to the receiver indicated that in their view, none of the potential personal expenses on their respective corporate cards were incurred for their personal benefit, as all of the expenses in question were either legitimate business expenses and /or had the prior approval of Mr. Nygard or other senior management," Richter said. "The receiver notes, however, that none of the respondents provided sufficient documentation evidencing such approval."

One former director submitted records showing she spent $9,464 at the Apple Store and another $1,540 at Shoppers during the relevant time period, claiming the items "were purchased at the direct request of Mr. Nygard and were of no personal benefit to me."

The woman accused Richter of holding her outstanding paycheque "ransom" until she had satisfied the receiver the credit card expenditures were genuine.

"My employment has been terminated and I have a family to support and bills to pay, all amongst the stress of the corona virus which has hit us all hard," she wrote in an undated email provided to court. "I feel that what you are doing is unfair to me, especially from a court officer."

dean.pritchard@freepress.mb.ca

Dean Pritchard

Dean Pritchard
Reporter

Someone once said a journalist is just a reporter in a good suit. Dean Pritchard doesn’t own a good suit. But he knows a good lawsuit.

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History

Updated on Wednesday, May 13, 2020 at 7:34 PM CDT: fixes typo

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