Problems plaguing a $14-million renovation to an Isabel Street building -- for 60 immigrant-housing units -- have forced the original contractor into receivership and the layoff of about 100 workers.
The assets of M & L General Contracting Ltd. are in the hands of receiver Ernst & Young, who was appointed by the court this week after the Royal Bank of Canada filed a statement of claim saying the company had defaulted on a $2.3-million loan.
But the company claims its financial problems are the result of a dispute with Manitoba Housing and Renewal Corp. (MHRC) over a $12.3-million contract it entered into with the provincial agency in the fall of 2012 to renovate an 80,000-square foot building that was originally built in 1979.
M & L's statement of claim alleges delays in securing technical requirements for permits put the project six months behind schedule and adding all sorts of additional costs for the contractor that it said MHRC refused to pay.
After many months of communication, M & L was fired from the project in mid-June and shortly thereafter filed a lawsuit against MHRC claiming $6 million in unpaid costs, plus $3 million in damages.
'It's had a pretty disastrous impact on our business'
Since then, no work has been done on the Isabel Street project, which was scheduled to have be completed in July.
But it also curtailed M & L's ability to do other work.
"It's had a pretty disastrous impact on our business," said M & L's CEO, Reece Tomlinson.
He said the receivership is "100 per cent related to the project."
Some of the laid-off staff had harsh words to say about the manner in which the company has been dealt with by MHRC.
Amber Lutz, the former head of human resources for M & L, said MHRC was insensitive to the challenges caused by the delays.
Joe Healey, the Ernst & Young partner responsible for the receivership, said the business has essentially ceased but certain projects that M & L is in the midst of may or may not get completed depending on its analysis of the operations.
"Our role as receiver will be to take possession and liquidate all the assets for the benefit of the creditors," Healey said.
It's a dramatic crash to earth for a company that was ranked as the 97th fastest-growing company in Canada by Profit Magazine last year.
The receiver does not yet have a creditors list but there is at least a handful of sub-trades who have outstanding claims against M & L, most of them related to the Isabel Street project that is to be managed by Immigrant and Refugee Community Organization of Manitoba (IRCOM) when it's completed.
The project is being funded by both the federal and provincial governments.
In its statement of defence, MHRC denies most of what M & L alleges, including that there were delays in the provision of key drawings that M & L said caused substantial delays at the outset of construction.
M & L claims it gave MHRC plenty of warning about the delays and was never given any indication it was a problem until being fired from the job and told to leave the property.
MHRC said it did receive notice of the later completion date, "However, MHRC states this completion date was not in accordance with the requirements of the contract... and that this completion date was not acceptable to or approved by MHRC."
A spokesman from Manitoba Housing and Community Development said its first priority is the completion of the IRCOM project and that a new tender has been issued for construction management services.
A department spokesman said since the project is almost 70 per cent finished, "We anticipate a completion date of February and it is expected there will not be extra costs, as a result of the delay."
That estimation is disputed by Tomlinson. There has been virtually no work undertaken on the site since M & L was fired in mid-June.
"They said we defaulted on the project due to the fact that we would not be done by the July 7 completion date but they just put it out for tender again," said Tomlinson.
"We would have been done the project in three weeks if we were continuing to work."