BuildDirect is getting some much-needed financial relief after filing for creditor protection last October.
The Vancouver-based tech firm announced Monday (March 26) it has raised US$28 million in new funding and exited from creditor protection in the wake of financial restructuring.
“At the end of the day we faced many, many challenges and I know we have more ahead. But today, BuildDirect exits creditor protection recapitalized, and in a position to sustain and grow as a leader in the home improvement industry,” CEO Dan Park wrote in a LinkedIn blog post.
In addition to the new US$28 million funding round, the ecommerce company known for specializing in homebuilding products also revealed it had converted US$15 million of interim financing that was provided during the Companies' Creditors Arrangement Act (CCAA) proceedings.
The US$43 million raise was led by Mohr Davidow Ventures, with participation from Fidelity Investments Canada ULC, Pelecanus Investments Ltd., Lyra Growth Partners Inc., and Beedie Capital.
"BuildDirect is pursuing a very large market opportunity and we believe that the company's assets, capabilities, and executive leadership uniquely position the company to be extremely successful moving forward," Mohr Davidow Ventures general partner Katherine Barr said in a statement.
BuildDirect has been operating “on much less cash” since filing for creditor protection, according to Park’s blog post in which he acknowledged not knowing much about CCAA proceedings when the company filed for protection last fall.
“I quickly discovered that many people outside of the company did not think that we would make it out the other side as it's a feat accomplished by few,” the CEO wrote.
“I am grateful for these individuals who could have left but instead chose to risk it all to stay and fight. What we have accomplished over this short period of time is incredible.”
Park left Amazon.com, Inc. (Nasdaq: AMZN) late last year to join BuildDirect as its chief operating officer.
BuildDirector founder and then-CEO Jeff Booth resigned from the company shortly thereafter and Park was promoted to CEO.
The company filed for creditor protection on October 31, 2017 — days after Park’s promotion to CEO — with principal owing to secured lenders sitting at $75 million, according to documents filed in B.C. Supreme Court.
In an affidavit filed in B.C. Supreme Court by BuildDirect’s vice-president of finance, John Sotham, said the company required interim financing to continue operations while it “carries out a formal sale and investment solicitation process.”
By March 12, 2018, creditors had approved the company’s plan of compromise and arrangement under the CCAA, with the plan going into effect on March 22.
As part of the plan, creditors agreed to convert US$58 million of debt into equity.
Upon its exit from creditor protection, BuildDirect now has US$4 million in debt remaining.