Nygard company restructures finances in midst of sexual assault class-action lawsuit against owner

Nygard Group of Companies is financially restructuring its business to avoid bankruptcy, a company spokesperson said, as fashion mogul Peter Nygard faces several sexual assault allegations in New York.

Late last month, the company announced Nygard was stepping downfrom his role as chairman and would divest his ownership stake. Thenon Tuesday morning,the company fileda notice of intention (NOI) to file a proposal under the Canadian Bankruptcy and Insolvency Act, a spokesperson saidin a statement sent tomedia.

This does not mean the company is going bankrupt, but that the company is seeking protection while it restructures its finances.

Given the lawsuits, "damage was certain to occur,"the spokesperson said.

Those damages include losing a top customerand one of the company's financial lenders seeking immediate payment, the spokesperson said.

"The companywill be working with several professional advisers during the process, including a trustee whowill assist with the development of a restructuring planand in generaloversee the NOI process as a whole," the spokesperson said.

The spokesperson twice stressed in the statement thatit's "business as usual" at the company and its stores while the financial restructuring takes place.

Winnipeg marketing researcher Fang Wan says this is another way Nygard the company is trying to distance itself from Peter Nygard the person.

The move is a signal "that they're really aware that a brand of a company is much more than the brand of its leader," said Wan, a professor at the University of Manitoba'sAsper School of Business.

"I think this is a very tough time, but I think the company is doing these protective measures, and I think that's a good sign."

Any company that files an NOIlike this has a lot of work ahead, according to David Lewis, a board member with the Canadian Association of Insolvency and Restructuring Professionals.

"Anotice of intention to make a proposal is basically that they intend to make a proposal to their creditors," said Lewis. "And that proposal needs to be better than a bankruptcy."

The first step is to figure out how to pay a company's debt to its creditors, said Lewis. The creditors then have a say, and vote on whetherto approve the plan.

"Most proposals, they do work most of the ones I've seen," said Lewis. "I mean, there are ones that get voted down, so the company gets deemed bankrupt."

This notice doesn't exempt the company from its responsibilities, said Lewis.

"The company is supposed to pay ongoing expenses. They're supposed to stay current with tax filings," he said. "Really, it just gives them time to determine what's best, which is what they need right now."

On top of being accused of rape in a class-action civil lawsuit, police in the Bahamas are investigating allegations made by four women who are part of the class-action regarding an alleged "sex trafficking ring."

FBI investigators have raided Nygard's offices in New York, but did not confirm that it was related to the allegations.

WATCH |Nygardcompany restructures:

Nygard company restructures finances in midst of sexual assault class-action lawsuit against owner

5 years ago

Duration 1:32

Nygard Group of Companies is financially restructuring its business to avoid bankruptcy, a company spokesperson said, as fashion mogul Peter Nygard faces several sexual assault allegations in New York.

Nygard also faces legal action from Sitrick and Co., a Los Angeles-based public relationsfirm.

In October 2018, aCalifornia arbitrator ordered Nygard to pay what's owed to the Los Angeles firm for work it did, plus interest and legal fees.

Nygard did not pay, so in July,Sitrick took the matter to the Manitoba Court of Queen's Bench, which ordered Nygard to pay roughly $1.6 million.

None of the accusations have been proven in court and no criminal charges have been laid.