Building company faces receivership, broadens product safety warning

Sunday, May 2, 2010

by SUSAN MANN

Financially troubled Cover-All Building Systems Inc. faces receivership and growing concerns about the safety of all of its building lines.

On April 23, the Court of Queen's Bench of Alberta in the judicial district of Calgary ordered the company into receivership and appointed PricewaterhouseCoopers as its receiver.

Court papers indicate the order came at the request of the building manufacturer’s stakeholders, including its major lender, CIBC. Draft consolidated financial statements dated Feb. 27 show the company, based in Saskatoon and Calgary, has assets of $133 million, including $43 million in tangible assets and $90 million in intangible assets. The manufacturer has been under court protection from its creditors since March.

Greg Prince, PricewaterhouseCoopers partner in advisory services, says the company’s assets will be sold. The deadline for non-binding expressions of interest to buy part or all of the company’s assets or property is May 12.

The sale process has just started and “presently it is too early to predict what realizations may be available to the company’s creditors,” he says.

Last week, the company also published a warning on its website that Cover-All building owners should have a structural engineer assess whether their structures meet building code requirements for wind and snow loads.

There are about 2,000 Cover-All buildings in Ontario, mainly in the farming sector. Some of the buildings, made of polyethylene fabric stretched over a steel frame, are also in the commercial and industrial sectors.  Ben Hogervorst, general manager of Cover-All Buildings of Ontario, a dealer for the western-based manufacturer, couldn’t be reached for comment.

Stephen Puddister, spokesman for the Ontario Ministry of Consumer Services, says in an email that people with concerns about their building can contact the Building Standards Office in their municipality. It’s the individual municipalities that are responsible for enforcing Ontario’s Building Code.

Employees of businesses that own Cover-All-manufactured buildings can contact the Ontario Ministry of Labour if they are concerned about their safety.

For people who own a potentially unsafe building, Puddister says they can contact a lawyer if they think they may have some right to compensation from the company. The Consumer Protection Act doesn’t apply in this case because it only protects consumers acting for personal, family or household purposes and not business purposes. But the good and services provided by Cover-All seem to be for commercial rather than personal use, he says in the email.

The company stopped production in March and issued a safety warning about its Titan buildings after concerns surfaced that the line was susceptible to collapse under heavy snow or strong winds.

Cover-All officials said they would review the designs of all building lines. The most recent warning, dated April 23, notes there are not enough funds to complete the review. The company has determined some of the structural members and connections of some of the spans of certain buildings “may not meet the present combined wind and snow load capacity requirements of applicable building codes.” The warning applies to all building lines.

Company officials couldn’t be reached for comment.

In the April 23 warning, Cover-All president and chief executive officer, Nathan Stobbe, writes that since the company couldn’t review all its building lines, it can’t make specific safety recommendations.

Sean McGivern, Ontario coordinator for the National Farmers Union, says he’s always been leery of the fabric-covered buildings. “If you get one rip in the tarp or something like that you have to replace the whole roof.”

Henry Stevens, president of the Christian Farmers Federation of Ontario, says he’s aware of the company’s financial troubles but hasn’t heard of any safety concerns from members.

Don McCabe, vice-president of Ontario Federation of Agriculture, says he’s also not aware of any concerns about building safety from their members. 
 
At one time Cover-All was the largest supplier of pre-engineered membrane building systems in North America with an estimated market share of 25 per cent. There are about 35,000 Cover-All buildings worldwide. Things started to go sour for the company because the world-wide economic downturn decreased demand. Cover-All was also facing a number of lawsuits in the United States, Canada and Europe. BF