Struggling with staff lay-offs and multiple lawsuits, the owner of embattled Squamish-based modular structure company Westcoast Outbuildings is vowing to “right the ship” amid the company’s cash-flow problems and mounting legal woes.
In a phone interview with The Chief, company co-founder Geoff Baker said the company has been working to get the business back on track since laying off employees this summer.
“Our industry has major ups and downs with projects and we had a cash flow shortage and so we laid off staff and that’s the story, “Baker said. “What we’re trying to do now is get back up into business and make good on those debts.”
On Sept. 11, Westcoast Outbuildings filed a notice of intention under the Bankruptcy and Insolvency Act.
This move can be the first stage of a restructuring process under the Act, allowing a company to re-order its financial affairs, through a formal proposal, according to a description by PricewaterhouseCoopers LLP. The notice of intention enables companies to avoid bankruptcy, while also allowing the creditors to receive some form of compensation for funds owed to them by the company.
“We’re looking at restructuring and we have an investment offer out to a reputable company who has shown some serious interest,” Westcoast Outbuildings company director Laura-Lee Normandeau told The Chief on Sept. 17. “We’ve given our timeline and right now we’re just negotiating with them so that we can continue operations and make a proposal to pay the creditors back.”
This summer, the company was hit with several lawsuits, including a claim from Rona Inc. over an allegedly unpaid $133,000 bill, while both the Surrey Board of Education and the Nisga’a Village of Gitwinksihlkw (NVG) have sued Westcoast, Baker, and Normandeau, for allegedly failing to deliver on building projects.
The NVG claims the company failed to deliver on a tourist centre building called “Welcome House,” alleging the community was “devastated” as it was depending on the structure to bolster its tourism industry while it wrestles with housing and unemployment issues.
In its lawsuit, the NVG claims it made payments of more than $537,000 toward the project, but the company allegedly used the money on unrelated projects without authorization.
Baker told The Chief he was unable to comment on projects that were the subject of court proceedings. In its legal response to the Nisga’a’s lawsuit, however, the company and its founders deny wrongdoing.
“In July 2019, Westcoast advised NVG that it had encountered financial difficulties and that it had been forced to temporarily lay off its production staff. Despite those difficulties, Westcoast remains fully committed to manufacturing and delivering the Welcome House,” the response states. “Baker and Normandeau deny any and all allegations made against them. At all material times, NVG was kept fully apprised of the status of production of the Welcome House project. NVG’s allegations of fraud and conspiracy are entirely without merit.”
Moreover, the response states that the company’s agreement for the Welcome House project did not require the funds “to be used by Westcoast for the specific purpose of the Welcome House project.”
“Westcoast owed no legal, equitable, or other obligation to use funds paid by NGC [sic] only for the purpose of constructing the Welcome House,” the response states.
The Board of Education of School District 36 (Surrey), meanwhile, claims in a lawsuit filed in B.C. Supreme Court that the company failed to deliver 10 portable buildings while allegedly refusing to return a $291,000 deposit. The school board claims the company admitted in July that it hadn’t built any of the portables and “had appropriated and/or converted all or part of the deposit to uses not authorized.” The board claims the deposit money was used for Westcoast, Baker, and Normandeau’s “personal benefit.”
These claims have not yet been tried or proven in court.
The board’s lawyer, Matthew Swanson with Borden Ladner Gervais, told The Chief that he is “unable to comment on client matters.” The school board’s spokesman, Doug Strachan, told The Chief that “it’s not appropriate to comment beyond what’s in the [notice of civil claim] to respect the court process.”
But Strachan said procurement processes for the portable buildings were followed as usual when it inked a deal with Westcoast.
“We did due diligence around the checking of the company’s capacity to fulfill a contract,” Strachan said.
“This process is long-established and used by other school districts and public institutions.”
Former Westcoast Outbuildings employees told The Chief the company went from 12 production employees a year ago to about 40 when almost the entire staff was let go in mid-July.
Westcoast owners Baker and Normandeau are no strangers to business woes and legal controversies though. The pair launched Easywash in 2005, touted at the time as an eco-friendly carwash company in North Vancouver with plans for a fast-growing franchise. Within a few years though, the company was bankrupt, leaving dozens of investors out more than $2 million. The company became insolvent under ballooning construction costs and Vancity calling in a substantial loan, Easywash filed for bankruptcy and changed its name, not losing a day of business with the same assets as its former corporate identity.
Baker told the Kelowna Capital News in 2009 that he was under no legal obligation to pay back shareholders after Easywash went under.
“That’s not how it works. No one wants to lose money, but it was a risk,” he told the paper.
Baker told The Chief that Easywash was a “totally different situation” and not related to Westcoast’s current challenges.
“We had a bank call in a loan on us,” he said.
In the present, Baker said Westcoast Outbuildings is working to meet its many obligations and do right by its customers and vendors.
“So here we are today,” he said. “We’re trying our best to recover the situation and work with our creditors to make good. We’re trying to right the ship and get it back up and going.”