Toronto Contractor Bondfield Wins Court Protection as Project Woes Mount
A Toronto area contractor at the center of a series of delays to major projects in Ontario, including a $139-million hospital expansion, has won court protection from its creditors. The Ontario Superior Court earlier this month granted Bondfield Construction Co.’s application for protection, court records show.
Lenders on the Cambridge Memorial Hospital’s 240,000-sq-ft expansion took over the project in December after it fell two years behind schedule. Subcontractors had stopped showing up for work, complaining they were no longer paid.
Lenders called the insurance bond on the project, posted by Zurich Insurance, to gain access to funding needed to complete the project.
The court also approved up to $8 million in debtor-in-possession financing from Zurich, according to the court order granting the contractor bankruptcy protection.
A hospital spokesman says Bondfield still is working on site, but there is a possibility that another contractor will be brought in to for the final phase of the project, which involves renovating an existing building.
Bondfield is the main contractor on up to $740 million in projects across Ontario. At least two others also have fallen behind schedule.
The contractor's struggles coincide with a big surge in losses at Zurich, which fielded more than $400 million in Canadian claims in the fourth quarter of 2018, said Greg Petrela, president of construction insurance broker Petrela, Winter & Associates, citing filings to the federal agency that regulates federally registered banks. insurers, trust and loan companies, as well as private pension plans subject to federal oversight.
He said the total is the largest bond default he is aware of in Canada. “It is looking like and, colloquially being spoken of as, by far the biggest bond claim in Canada’s surety bond industry,” he said.
Two units of Bondfield went into receivership in December amid work on major hospital projects.
Bondfield also is involved in a dispute with municipal officials over its work on the revamp of Toronto’s Union Station. The officials claim the project has major delays and budget overruns.
The firm, in business for about four decades and with 330 employees, took on a large amount of new work in recent years, including three major hospital projects.
In a court affidavit, Bondfield President Steven Aquino said more than 200 lawsuits have been filed against the firm or its board of directors in the last year, related to unpaid subs or breaches of contract, said a Globe and Mail report on April 4.
Aquino attributed the firm’s financial issues in part to its inability to raise new financing after an $80-million credit facility matured last year.