A British Columbia judge has granted creditor protection to a green building business startup — with a manufacturing plant in Moose Jaw — so it can search for a buyer to rescue the money-losing operation.
Vancouver-based Nexii Building Solutions Inc. owes its creditors over $112 million and faces “significant liquidity constraints,” based on a petition filed in B.C.’s Supreme Court.
It cannot pay its debts because it pursued “aggressive growth” in 2021. This included in the United States, where it constructed a manufacturing plant in Pennsylvania that proved costly after the U.S. partner failed to pay the $5 million licensing fee and could not perform its duties because it lacked working capital.
CEO William Tucker told national media that Nexii built the plant anyway — at significant cost — to protect its brand.
The company’s business grew after the expansion but not as high as anticipated, so beginning in 2021, it re-engineered the product to be competitive and profitable, the court document said. While this was successful and the product allegedly demonstrated strong profitability in 2023, the company had consumed significant capital during the previous 24 months.
“Ultimately, Nexii was unable to service its loans from the senior secured lenders (creditors), and beginning in April 2023, (defaulted) in payment of interest to the senior secured lenders,” the report said.
The company also took steps to reduce costs, including firing staff, shutting down the Moose Jaw plant — likely in the summer — and reducing operating expenses. It’s also considering terminating leases for sites it no longer requires.
The Moose Jaw Express could not reach anyone at the local office because the phone had been disconnected.
After hearing from the Vancouver company, a B.C. judge agreed on Jan. 19 to place it under creditor protection.
Nexii had declared in 2021 that it had achieved “unicorn status” — a private company with a valuation of $1 billion or more — faster than any other Canadian company and was worth $2 billion. This was nearly double than in 2020.
The company claimed it had developed a product called “Nexitte,” a low-carbon alternative to cement and concrete for residential and commercial floors, walls and roofs. The company had developed this proprietary material in Moose Jaw and said besides being less carbon intensive, it also created less waste.
Nexii highlighted how big names had stacked its board of directors and leadership team, including Gregor Robertson, former mayor of Vancouver; Mike Roberts, former global president and COO of McDonald’s; and actor Michael Keaton.
Nexii is now searching for a purchaser after striking a deal with its senior lenders for US$4.3 million in interim financing.
Of the $112 million owed to creditors, the company owes US$80 million to lenders Powerscourt Investments, Trinity Capital Inc. and Horizon Technology Finance Corp.
The B.C. judge ruled Nexii’s creditors cannot commence or continue any action, suit or proceeding unless they acquire written consent from the company, the court, or KSV Restructuring Inc., which is monitoring the company’s business and financial affairs.
Moreover, the judge stayed and suspended all current Canadian legal proceedings against the company.
It was a subsidiary of Burnaby, B.C.-based Symphony Group Companies (SGC), Symphony Advanced Building Technologies Inc. (SABT), which raised the breach of contract allegation. It had sued Nexii for allegedly failing to fulfill an early-stage licensing agreement.
“To say it was devastating is a polite way of putting things. It’s bewildering to us on the management side of Nexii as to where they hope to go with their expansion,” Gurdeep Kainth, managing director of SGC, told national media.
“I mean, with the millions of dollars invested in Nexii, of course nobody likes to lose money, but certainly this one felt even harder because of all the promises that were made.”
The next court date for SABT and Nexii is April.
Besides the Canadian-based allegation, the company also faces the same accusation in Pennsylvania, along with fraud, tortious interference and securities fraud.
Green construction company NexUS1 LLC and investor NexStock LLC have asserted that Nexii made false representations to generate investment and participation in its program. This allegedly resulted in major financial losses, reputational harm and operational setbacks for them, according to court documents.
The suit also names Stephen Sidwell, “serial entrepreneur” and former CEO of Nexii, as a defendant. Court documents describe him as the “individual bad actor principally responsible for perpetrating these frauds, doing so for his own personal monetary gain and aggrandizement.”
Sidwell resigned in October 2023, while three other senior executives have left since August. Tucker is now the new CEO.
Tucker told national media that the company should be an attractive acquisition target because its technology has value in a market focused on sustainable building practices.
The U.S. plaintiffs go further than SABT’s accusation by questioning the validity of Nexitte, according to the U.S. lawsuit, including allegations that the panels are heavier than others, that the panels’ fire- and water-resistance capabilities are based on illegitimate testing and that the company tested its panels under unrealistic conditions.
The plaintiffs also claim the panels cannot be manufactured or delivered at prices consistent with Nexii’s estimates.
Nexii and NexUS1 are in settlement negotiations, according to national media.
