Eamonn O'Rourke, CEO and co-founder of RenoRun, a hardware delivery company targeting on-site general contractors, poses outside their offices in Montreal, on, January 27, 2022. RenoRun hasn’t paid severance to a majority of workers that were part of cuts in February because 'a subset of investors' vetoed options presented by the company to do so, Mr. O’Rourke said.Christinne Muschi/The Globe and Mail
RenoRun Inc. has filed for creditor protection in Quebec, as the beleaguered company seeks to restructure itself and begin a formal sales process on Wednesday.
The Montreal-based startup’s board of directors approved the filing of a notice of intent last week, on the recommendation of its lawyers at Fasken Martineau DuMoulin LLP and trustee Deloitte Restructuring Inc., according to an e-mail sent to investors by RenoRun chief executive officer Eamonn O’Rourke on Monday.
By Tuesday, RenoRun, which is a delivery service that focuses on building and construction materials, had officially filed an intention proposal to Industry Canada’s office of the superintendent of bankruptcy.
This begins a 30-day period under the Bankruptcy and Insolvency Act, which gives RenoRun until the end of April, unless formally extended, to provide plans about how it will pay back the debt it owes to creditors.
In his e-mail on Monday, Mr. O’Rourke said RenoRun will notify all creditors in five business days. And on Wednesday, Deloitte will begin a formal sales process under creditor protection, he added.
Deloitte and Fasken did not respond to requests for comment on Tuesday.
In a recent interview with The Globe and Mail, Mr. O’Rourke described how his company rapidly met with insolvency. He said he’s severely disappointed. Canadian and U.S. investors have told Mr. O’Rourke “this is probably one of the most embarrassing things they’ve seen in venture capital,” he said.
Last year, RenoRun was a hotshot technology startup that had plans to expand across North America, and had announced a US$142-million financing led by Tiger Global Management. The company’s sales tripled for each year from 2018 to 2021, and it had plans to repeat that in 2022 by reaching $120-million.
But the unprofitable company was unable to raise needed capital despite numerous attempts over the past nine months after investors couldn’t agree on a financing package, The Globe reported. The final attempt died after the Quebec government’s investing arm walked away from an attempted US$30-million financing, pulling its US$5-million commitment.
RenoRun has also slashed its work force repeatedly. A fourth round of cuts to its staff brought down the company to 144 employees. However, RenoRun hasn’t paid severance to a majority of the workers that were part of cuts in February because “a subset of investors” vetoed options presented by the company to do so, Mr. O’Rourke said.
Although RenoRun’s revenue still managed to double to $77-million last year, the company has been in talks with potential buyers. As its formal sales process begins this week, Mr. O’Rourke is crestfallen. “We’re finding it hard to keep people engaged,” he told The Globe last week.