Bondfield Construction Company Ltd. has been granted court protection from its creditors almost a month after filing its initial application, saying it is facing a flood of lawsuits over its problems completing major public-sector construction projects in Ontario.
Bondfield president Steven Aquino – the son of company founder Ralph Aquino – said in a court filing that an application for protection under the Companies’ Creditors Arrangement Act (CCAA), filed March 5, initially faced opposition from Bridging Finance Inc., the company’s senior secured lender.
In an affidavit filed in court, Mr. Aquino said Bridging Finance asked the court in early March to hold off granting the bankruptcy protection application while it negotiated several outstanding issues with Bondfield.
Among the issues that were later resolved, Bondfield agreed to a deal that will see Bridging Finance fund legal work on a $147-million lawsuit Bondfield has brought against the Toronto Transit Commission over the company’s construction work on the TTC’s Finch West subway station.
The maximum $6-million in financing for the litigation will carry an interest rate of 14 per cent, Bondfield said, and will be secured against any lawsuit proceeds.
Bondfield has also secured up to $8-million in debtor-in-possession financing from Zurich Insurance Company Ltd. to cover its day-to-day operating costs.
Ontario Superior Court Justice Glenn Hainey granted the CCAA application on April 3, appointing Ernst & Young as monitor in the case.
Bondfield, based in Vaughan north of Toronto, has about 330 employees and independent contractors, and more than $1-billion in current outstanding construction projects for major public-sector institutions across Ontario, including hospitals and university buildings.
It has been far behind schedule on many projects, and the company said more than 200 lawsuits have been filed against it or its board of directors over the past 12 months alone, many related to unpaid accounts owed to subcontractors or breaches of contract from institutions that hired the construction firm.
In his affidavit, Mr. Aquino said Bondfield’s financial problems are due in part to its inability to raise new financing after its $80-million credit facility with Bridging Finance matured last year, and in part to negative media coverage of the company.
He also said he learned last year that Bondfield had fallen into “significant arrears” on its tax payments to Canada Revenue Agency, but said it has negotiated a payment plan.
Mr. Aquino said Bondfield needs “breathing room” so it can focus on completing construction projects and strengthen its balance sheet.