Judge clears path to Nygard Inkster property sale

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This article was published 03/01/2021 (1355 days ago), so information in it may no longer be current.

Manitoba’s highest court has given a court-appointed receiver the green light to proceed with the sale of one of Peter Nygard’s flagship business properties.

The transaction had been put on hold in advance of a Nygard appeal to have the receiver discharged.

However, in a written decision released Dec. 31, 2020, Manitoba Court of Appeal Justice Janice leMaistre quashed a stay halting the sale of Nygard’s Inkster Boulevard property by Richter Advisory Group.

Sale of the property had been initially approved by Queen’s Bench Justice James Edmond in November 2020, with a set closing date of Jan. 18.

Richter lawyers had argued any further delay could jeopardize the real estate deal, which they described as a “hard-fought transaction,” and the only offer made on the Winnipeg property since it went on the market last April.

“In my view, the relative prejudice weighs in favour of cancelling the stay,” leMaistre said. “If the stay is not lifted, the sale agreement will come to an end.

“Despite the prior extensions which arose due to the condition of the Inkster property, and which resulted in a reduction in the purchase price, I am not prepared to speculate the closing date might be extended beyond Jan. 18, 2021.”

The Nygard Group of Companies was placed in receivership in March 2020 to repay a US$25-million debt to American lenders White Oak Commercial Finance and Second Avenue Capital Partners.

Nygard lawyers argue that debt has been paid in full, and have filed an appeal with the Manitoba Court of Appeal to have the receiver discharged.

At a hearing last month, lawyer Colby Linthwaite argued Nygard Properties Ltd. — the owner of the Inkster Boulevard property, and one of nine companies controlled by the Nygard Group — has satisfied its debts and can’t have its assets sold to pay the debts of other companies in the group.

“The reality of the situation is that my client, NPL, is the owner of the property… and owes nothing more to the lender,” Linthwaite said.

LeMaistre said that position ignores the distinction between a privately appointed receiver and a court-appointed receiver, the latter of which acts for the benefit of all stakeholders.

“In my view, it is clear from the record that there are a number of issues that have yet to be determined in the receivership,” leMaistre said. “(The) assertion that the lenders have been paid overly simplifies a complicated factual matrix.”

Peter Nygard, 79, was arrested and taken into custody in Winnipeg last month on a U.S. extradition warrant to face racketeering and sex offences that allegedly took place over decades. He is set to apply for bail Wednesday.

Ten months ago, a class-action lawsuit was filed in the U.S., alleging a decades-long pattern of sexual abuse involving dozens of women and girls.

Nygard maintains his innocence, alleging he is the target of a vast conspiracy.

Meanwhile, Nygard IT systems were the target of a ransomware attack Dec. 12, Richter said in court documents filed last week.

“By reason of the size and complexity of the IT system, and the caution needed in taking steps to assess the ransomware attack, the full scope and impact of the ransomware attack is not yet certain,” Richter said.

A ransomware attack encrypts targeted files so they are no longer accessible by the file owners, who are then demanded to pay a “ransom” in exchange for their return.

A message posted to a website hosted by the attackers demanded $3.6 million — later doubled to $7.2 million — in return for a “decrypter” program, and threatened to make the files public if the receiver did not comply by Jan. 2.

“Payment of the ‘ransom payment’ will not be considered by the receiver,” Richter said.

Richter’s IT division traced the attack to Netwalker, a ransomware created by Circus Spider, a “highly sophisticated cybercrime group” that sells its services on the dark web.

“This malicious business model involves Circus Spider recruiting affiliates to help cybercriminal groups execute nefarious activities and spread the Netwalker malware in return for affiliate payments,” Richter said.

dean.pritchard@freepress.mb.ca