BuildDirect (Vancouver, British Columbia) filed for protection from its creditors in Canada on Oct. 31 after it could not reverse mounting debts, according to the Vancouver Sun. It filed for similar protections in the United States on Nov. 1.
Although sales generated $72 million in revenue at the end of September, costs surpassed revenues by $2.6 million per month, the company said in court filings. It now owes $75 million to three lenders.
The British Columbia Supreme Court granted BuildDirect a stay of proceedings under the Companies Creditors Arrangement Act. The will allow the company to evaluate a range of alternatives to recapitalize so it can transition from an e-commerce business to a platform business. The company was also granted protections in the U.S.
As part of its restructuring process, BuildDirect secured $15 million in connection with its filing.
The company’s CEO left abruptly Oct. 27 and wrote in a LinkedIn post that his growth plan for BuildDirect failed after revenue stalled. He left because his decision to grow the business by taking on more debt “created an unforeseen roadblock” to his leadership.
Updated Nov. 15 to clarify that an auction is not one of the recapitalization alternatives and that BuildDirect has secured $15 million in financing.
Update March 26, 2018: BuildDirect raises $43 million, emerges from creditor protection.