An early assessment of DB Services, the company that built RidgeView Place in Langford, indicates that under the best-case scenario, $126,019 would be available to unsecured creditors while the worst case could put that figure at zero, the bankruptcy trustee says.
The Grant Thornton trustee Mark Wentzell said at the first creditors’ meeting this week that this projection was largely influenced by the current lack of information about inter-company accounts.
DB Services, which has been a developer in Langford, voluntarily filed for bankruptcy on July 31. The figures cited would represent assets converted into cash after payment to secured claims, such as Canada Revenue Agency being owed $31,369, and other priority claims, plus the trustee’s fee. As of this week, the trustee has received 45 unsecured claims totalling about $12.348 million, Wentzell said.
It was clear at the Tuesday meeting that there is considerable work to be done before the final financial picture will be clear.
“There were relatively few assets in this estate at this time. That’s subject to our review of inter-company balances” along with some other matters in the report, the trustee said.
Five inspectors, all creditors, were appointed at the meeting to represent the interests of creditors and work with the trustee.
Based on discussions with DB Services management, since late 2019, supply-chain issues and rising material and labour costs led to cost overruns and cash-flow deficiencies, the trustee said.
“These cash-flow deficiencies were, ultimately, not sustainable.”
Secured creditor Island Savings Credit Union is owed $24,580, while Steelcase Financial Services, also secured, is owed $23,585.
DB Services was originally incorporated in Alberta in 2005 as Yankee Valley Estates Ltd. In March 2014, it continued in B.C. under its current name, the trustee said in his report to creditors. Its three directors are Margaret McKay, Matthew McKay and Gary Lahnsteiner.
Shareholders of DB Services include two related companies controlled by the McKay and Lahnsteiner families, the report said. The trustee put the net realizable value of the various companies at $6.9 million.
DBS operated for several years in the West Shore as a design builder and has “successfully constructed many of the multi-residential buildings in the Langford core,” the trustee said.
“It appears that, at least until the onset of the COVID pandemic, DBS operated profitably and delivered its projects on time and on budget. These positive historical results and overall good reputation have been impacted by three factors which prima facie [at first look] were outside the control of DBS.”
The first factor is connected to apparent deficiencies in construction of RidgeView Place (earlier known as Danbrook One), in Langford. Tenants have twice evacuated the building because of safety concerns and the building remains vacant.
DBS, the structural engineering firm it hired and the City of Langford are defendants in a lawsuit started by the Centurion Group, RidgeView’s owner, which sought to win structural remediation costs and loss of income. No trial date is set.
Rising construction costs and the increase in Bank of Canada rates were key factors in DBS’s financial health, the trustee said. Bank of Canada rates affected the valuation of projects.
These include 2840 and 2830 Peatt Rd., which were completed last year, as well as two ongoing projects. Current projects are two, six-storey apartment buildings at 641 Goldstream Ave., called Rockford Place 1 and 2, and a six-storey apartment building called Harmony at 705 Station Ave.
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