Judge orders preservation, sharing of Nygard business documents

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This article was published 08/12/2020 (1515 days ago), so information in it may no longer be current.

Less than three weeks after a judge approved the sale of former fashion magnate Peter Nygard’s Inkster Boulevard warehouse, lawyers involved in the case returned to court Tuesday.

On the docket: asking a judge to clarify how they should handle tens of thousands of electronic and physical documents that belonged to Nygard’s former businesses and must be preserved as legal battles rage on.

Nygard, who founded his clothing empire in Winnipeg in 1967, stepped down as president of Nygard International after the FBI and city police raided the company’s New York City headquarters in February.

He faces no criminal charges in the United States, but faces multiple accusations of sexual assault and misconduct from as many as 57 women, according to a U.S.-based class-action lawsuit filed earlier this year.

In March, Manitoba’s Court of Queen’s Bench ordered Nygard’s companies into receivership to repay a US$25-million loan to their creditors. As part of the process, properties in Winnipeg were sold, with Court of Queen’s Bench Justice James Edmond authorizing sale of the warehouse Nov. 19.

His ruling, which is now being appealed by lawyers for Nygard’s companies, gave all parties three weeks to figure out the most cost-effective way to store thousands of documents that had been housed at the Inkster building.

Lawyers for the Nygard Group of Companies, for the receiver (Richter Advisory Group), and for the creditors agreed relevant documents have to be saved, but there was some dispute over which ones, and at what cost.

On Tuesday, they asked — in a phone-in hearing — for direction from Edmond, who ordered the receiver to turn over copies of any documents Nygard’s lawyers have said they need in order to defend him in the class action and other ongoing lawsuits.

“Some litigants have taken the position that all electronic records and the more than 5,000 boxes of physical records located at the Inkster property should be preserved and be available for whatever proper litigation purposes in the future,” Edmond said.

He said the documents also have to be preserved for tax purposes and as part of the usual receivership process.

The receiver, which has control over the documents, must co-operate and provide the Nygard companies with copies of what they asked for and agreed to pay for, Edmond said.

“There should be no dispute on this. The documents have been identified and should be provided subject to payment of costs,” the judge said.

The judge declined to weigh in on specific categorization of documents or determine which ones were more important to save — at higher cost in electronic cloud storage — than the rest.

He ordered all documents have to be saved in cloud storage to address concerns from U.S. litigants, and it should be done as cost efficiently as possible. He declined to order another company, which was sharing server space with Nygard Group, be allowed to copy the entire contents of the server to regain access to its own business documents, which were caught up in the receivership.

Wayne Onchulenko, one of the lawyers for the group of nine Nygard companies, said there are “tens of thousands” of documents the legal team needs to review. He said the receiver’s refusal to turn over the records before seemed to be out of concern about how they would be used.

“There seems to be this implicit fear that somehow if we get these documents, we’re going to do something terrible and cause the receiver some kind of irreparable harm. Remembering that these are our documents, there are no privacy issues. Remembering that the businesses are closed down now, everything’s been sold,” Onchulenko said during Tuesday’s hearing.

“All we want to do, and frankly have a right to get, is documents so that we can prepare ourselves for litigation that will be continuing after the receiver is discharged.”

katie.may@freepress.mb.ca

Twitter: @thatkatiemay