Window, door group still open under monitor

Hey there, time traveller!
This article was published 24/02/2023 (1137 days ago), so information in it may no longer be current.

A group of window and door companies based in Winnipeg, including Polar Windows and Accurate Dorwin, has been declared insolvent and a court-appointed monitor is in place while a restructuring plan is worked out.

Meanwhile the companies — the others are Glass 8, National Interiors and two Maritime-based companies called Allsco Windows & Doors and Alweather Windows & Doors — continue to operate, employing 335 people.

Court documents say the combined companies have about $5 million more in liabilities than in assets backing it.

Former and current staff have spoken on background, concerned about customer deposits that have been made — totalling more than $1 million.

One former staffer said sales people were being encouraged to continue to take deposits for new orders even though, the former employee said, the infrastructure to provide servicing is no longer in place.

Winnipeg-based Stephen Segal, the CEO of the companies, and his two U.S.-based financial partners, took the initiative to apply for creditor protection through the Companies’ Creditors Arrangement Act (CCAA) because, he said, “it provides us the breathing room and opportunity for us to carry forward to the best interests of all stakeholders.”

Segal said the companies’ lenders — led by TD Bank — are supportive, as are “the vast majority” of suppliers and “the customers we have talked to.”

“It’s business as usual,” Segal said. “We have dozens of crews out doing installations and bringing new orders in.”

But there are clearly disgruntled customers.

One of them, Bernie Bellan, sued Polar Windows in December for $2,200, which was the deposit he made for work that was ordered a year and half prior to that.

After being frustrated with the delays and lack of communication from the company, he finally received an email from Segal himself saying the company would complete the work and Bellan would not be charged the balance.

“There was no mention of the fact that I was just about to receive a judgment from them,” said Bellan. “I figured one of the conditions would be that I dropped the lawsuit.”

Plans were arranged to install the large patio door window last week and when the workers came, they said the window broke on the way over.

Bellan said the company told him they would reorder the glass.

“I thought, ‘oh sure, now I’ll have to wait another year and a half,’” said Bellan.

In his affidavit, Segal said after having acquired Polar Windows in 2017 — which was having financial difficulties at the time — he and his partners believed they could create cost synergies by acquiring other companies.

From March, 2020 to July 2021 they acquired five more companies, including at least one of which was under creditor protection.

But Segal said the pandemic caused projects to be delayed, supply chain issues disrupted raw material deliveries and they experienced shorter terms on accounts payable and longer terms on accounts receivable.

The company was losing employees, in particular senior management, and mistakes in orders started occurring.

One Winnipeg supplier to the window and door industry, who is not a creditor, said, “What is going on there has nothing to do with the supplier market. These are self-inflicted wounds. The company was under-capitalized.”

The six companies combined have unsecured debt to suppliers of $9.5 million and secured debt to lenders totalling $13.5 million.

Paul Rehal, the owner of Winnipeg Plastics and Tool Ltd. is owed $21,934 by Polar Windows. He said he’s been doing business with them for many years.

“I’m not going to lie, the last few years I have been giving them a lot of rope because of our relationship,” he said.

Now his company will only take orders from Polar Windows and the other companies in the group on a pre-paid basis.

“It’s clear there are management issues there because they’re asking for court protection,” Rehal said.

“I think it is a classic case of biting off more than they could chew.”

Gordon Seier, president of Fenestration Manitoba, an industry association, said that while it is unfortunate for the industry, the companies involved had good reputations for doing quality work.

Segal said there is a lot of work to do to figure out the restructuring. For instance, a plan of arrangement, that typically offers creditors some terms for a settlement and usually accompanies the CCAA process, has not yet been presented.

Meanwhile the companies have bank financing so they can continue to operate while being under creditor protection from the courts.

martin.cash@freepress.mb.ca