Vancouver tech darling BuildDirect has filed for creditor protection days after its CEO and founder resigned abruptly from the company known as the Amazon (Nasdaq: AMZN) of homebuilding supplies.
According to court documents filed October 31 in B.C. Supreme Court, “the immediate cause of BuildDirect’s financial difficulties is its failure to complete an anticipated significant equity financing in mid-October 2017.”
The e-commerce company said it requires immediate access to interim financing to continue operations while it “carries out a formal sale and investment solicitation process.”
Court documents state the principal amount owing to secured lenders is about $75 million.
In a lengthy LinkedIn post made on October 27, founder Jeff Booth said his resignation was tied to a “fateful decision to bring more debt into the company to try and get to the other side of our technology build.”
He said the February 2016 launch of its new Home Marketplace platform fell “victim to its own runaway momentum.”
The company’s technology couldn’t keep up the demand from buyers and suppliers and BuildDirect required more capital than anticipated to develop its technology.
It was unable to raise enough from investors.
The court documents state the company’s revenue is $72 million for the fiscal year as of September 30, but operating costs have exceeded revenues by about $2.6 million a month.
“The company is unable to meet its liabilities as they come due, including its obligations to suppliers, and expects to default on its covenants to the secured lenders on October 31, 2017,” the court documents state.
When the Home Marketplace platform launched last year, the company had more than 300 employees worldwide.
But court documents state BuildDirect now has 224 employees, 80% of whom are based in Vancouver.
Booth told Business In Vancouver in 2014 he eventually planned to grow the headcount to nearly 500 workers.