Capital Iron, the landmark store along Victoria’s waterfront that closed its doors permanently on Dec. 17, has filed for bankruptcy.
With debts of about $4.29 million and assets of just $548,001, the 88-year-old company, which evolved over the years into a must-visit retailer, is now under the direction of bankruptcy and insolvency trustees Derek Chase and Associates based in Campbell River.
Capital Iron filed for bankruptcy Dec. 15 and the first creditors meeting has been set for Jan. 10 in Saanich.
In the statement of affairs provided to the trustee, Capital Iron owner and president Mike Black listed 187 unsecured creditors who are owed a total of about $2.87 million.
“It has been a heartbreaking and extremely stressful time both physically and emotionally since the announcement was made,” Black said in a statement to the Times Colonist.
Black said they had hoped to wind down the business and maximize the funds that would be available to creditors.
“This would also allow us to give proper notice to our staff so they could find new employment and give customers a chance to use up any gift cards that they had purchased. As we worked our way through the process it became apparent that it was going to be a challenge to realize enough money through the liquidation to pay all the creditors,” he said.
Black said the receiver is working on finalizing the sale of Capital Iron’s assets and is expected to have a report available for creditors at the meeting in January.
He said the Capital Iron name may live on as Fred Aram, owner of West Coast Appliances, has purchased the rights to the name from the trustee. Black said there are plans for a store that specializes in outdoor kitchens, barbecues, hot tubs and patio furniture.
The list of Capital Iron’s creditors is a reflection of the company’s focus on outdoor living as it features big-name barbecue producers Napoleon, which is owed $308,000, and Weber, which is owed $246,930.
Hot tub manufacturer Watkins is owed about $181,000 and Quality Craft, which specializes in storage and outdoor living products, is owed about $157,000.
According to the trustee, creditors must file a proof of claim before the first meeting of creditors and prove that claim before any distribution of proceeds from the estate.
There may not be much to distribute.
According to the statement of affairs, total assets held by the company are $548,001 — $375,000 in cash, $100,000 in remaining inventory, $65,000 in vehicles and $8,001 in machinery and equipment.
The seven secured creditors, which would be in line to get paid before unsecured creditors, have claims worth just over $1.42 million.
The largest secured creditor is Eveline Black, Mike Black’s wife and the daughter of former Capital Iron owner Ron Greene.
Eveline Black has a claim of $955,284 based on having stepped in to offer a secured business loan in 2020 to replace the collateral the company lost when it sold land to Reliance Properties.
“Capital Iron needed to borrow a large sum of money to facilitate (the 2011 buyout of business partners),” said Mike Black. “The financial institutions we approached all required collateral which I did not have. My family was kind enough to offer up part of their property holdings as that collateral. Fast forward to 2020 and the property being sold to Reliance Properties. At that point the lender needed replacement collateral or the loan repaid.”
Eveline Black then stepped in and assumed the position of the financial institution.
“If this had not happened then Capital Iron would have had to close in 2020,” said Black. “At that time, we felt that despite COVID and the tough retail times the company faced, we could still make a go of Capital Iron.”
Greene sold the company’s waterfront property and parking lot to Reliance for what is expected to be a massive redevelopment in the area that will include a new home for the Art Gallery of Greater Victoria.
The redevelopment intends to tear down existing buildings, except for three heritage sites, including Capital Iron, to make way for industrial and commercial space, offices, residential units, live and work units for artists, and public open space.
The new development would have included Capital Iron in its existing building.
“Our family feels privileged to have been part of the fabric of Victoria for 88 years. We are especially proud of our involvement in the community over that period of time, which includes sitting on local boards, coaching amateur sports and contributing almost $1 million to local charities over the last number of years,” Black said.
The first meeting of creditors is set for Jan. 10 at 202-4400 Chatterton Way at 11 a.m.
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