Woman worries she's out $5K after Manitoba window company files for creditor protection

A Winnipeg woman says she's at her wit's end after waiting nearly nine months for her windows and doors to be replaced by a Manitoba-based company only to find out it filed for creditor protection, and there's little she can do to get her $5,000 deposit back.

Valerie Alderson says she put that deposit downwith Polar Window in August 2022. The company was to supply and install new windows and doors in her home, she said.

A copy of the contract shows the total costfor the replacementwas quoted as $14,159.55 when Alderson paid her deposit,with the expectation that the work would be completed in 12 to 14 weeks.

She says she received an email in January saying the frames would be available by mid-March, but that month came and went without an installation date.

It wasn't until earlier this month that she learned via email that Polar Window and five affiliates had applied for creditor protection under the federalCompanies' Creditors Arrangement Act.

"I said, 'Well, where does that leave me? I don't have a date, I don't have the product, I have nothing, and you've got my money,'" Alderson told CBC.

She said she asked for her deposit back but was told that wasn't possible since the company is in the middle of creditor protection proceedings.

Companies insolvent

Polar Window of Canada Ltd., which operates as Polar Windows, and its affiliates filedanapplication in Manitoba Court of King's Bench for creditor protection in February 2023.

Those affiliates include five other window, door and floor installation companies Accurate Dorwin, Glass 8, National Interiors, Alweatherand Allsco which operate in several provinces and the United States, and have employees in Manitoba, Alberta, New Brunswick and Prince Edward Island. All are controlled by the same holding companies: Polar Holding Canada LLC and a numbered company, 7440783 Manitoba Ltd.

The court application states the group of window, door and floor installation companies are insolvent aftersuffering losses due to supply chain issues and other challenges, such as staffing and delayed delivery dates due to the COVID-19 pandemic.It says the companies won't be able to continue operating without creditor protection.

The companies had 950 ongoing projects across Canada and the U.S., with combined customer deposits for more than $3.6 million at the time of the creditor protection application, thecourt documents show.

Each of the companies has been operating in a net-loss position since 2021, according to the documents.

The Companies' Creditors Arrangement Act allows companies that owe at least $5 million to file for protection from their creditors in order to restructure and continue operating under new financial terms, or to wind down the business and sell off assets to pay creditors.

The process is overseen by a court-appointed monitor, usually an accounting or financial advisory firm.

Altogether, the cumulative net loss forPolar Window and its affiliates was approximately $8 million, according to an affidavit from Stephen Segal, CEO and president of Polar Window'sholding company.

Court documents show Polar Window alone owed more than $2.6 million to various different creditors.

The documents also show the group of companies are moving toward selling off some of their assets and/or seeking outside investors to pay down their debts.

In an email, Segal said Polar Window continues to operate under the creditor protection process.

"This court-supervised process provides Polar the best opportunity to restructure and to provide the best outcome possible to all stakeholders, including our customers," he said.

Alderson said she'slooking into her options, butshe's growing increasingly frustrated.

"I've worked very hard for that money, and I had believed in supporting a company in Manitoba," she said. "[I gave] them that money in good faith that they will do what the contract has asked of them."

Limited options for customers

Jeff Orenstein, a Montreal-based lawyer withConsumer Law Group, says the options for customers arelimitedwhen companies file for creditor protection, because the company isn't technically in charge of its own finances anymore.

The process alsoputs a stay on any legal action while the company is undergoing restructuring, he noted.

Customers can try to get their money back by filing a proof of claim with the court-appointed monitor, but that could take time,said Orenstein.

"Giving back deposits, I'm going to guess that the monitor did not find that to be a high priority and is sort of trying to keep as many assets as the monitor can to try to salvage whatever can be done with this company."

It can also be hard for customers to predict whether they'll end up in a creditor protection situation,he said.

"I'm not sure you can completely avoid a situation where, you know, out of nowhere, a company that may have been around for a very long time and looked like it was doing good business and was successful suddenly files for protection."

But there are some things you can do to protect yourself, he said.

If a contractor is asking for a deposit, it shouldn't bemore than 10 per cent of the total contract value, he said.

Also, make sure that any company doing renovation work in your house has insurance, and ask if they have a surety bond, which can protect a business from financial loss if a contractor or supplier doesn't fulfil itsobligations, he added.