A well-known Saskatoon-based manufacturer of pre-engineered, fabric-covered shelters used for livestock barns and crop storage has been granted creditor protection.
Cover-All Building Systems was approved for creditor protection last Wednesday (March 24) in Court of Queen’s Bench in Calgary.
The company, which currently bills itself as the largest supplier of pre-engineered membrane building systems in North America, with a market share of about 25 per cent, has raised about 35,000 storage buildings worldwide.
In an affidavit posted last week by court-appointed monitor Ernst and Young, CEO Nathan Stobbe outlined how the company’s sales peaked in 2008 but came under pressure in the subsequent worldwide economic downturn.
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“The recession has not only decreased demand, but it has also resulted in the chronic overcapacity of buildings and building supplies, which has led to price competition among manufacturers,” Stobbe stated.
Among those and other challenges, the downturn “has weakened the Cover-All Group and ultimately left it unable to deal with any further economic shocks.”
The company faces further pressure from its decision to suspend production of all its building series lines, after a review found “potential engineering issues” with the company’s Titan building line.
Cover-All issued a safety notice March 19 to owners of Titan buildings, warning that some “may not meet the maximum combined wind and snow load capacity requirements” of applicable building codes.
During the suspension and engineering reviews, the company has laid off most of its employees and kept enough cash on hand to operate at that low level for about eight weeks.
As of Jan. 31, the company had assets with a book value of about $141 million, and liabilities of about $96 million.
The company has also been named in suits filed by some customers, although it said its management and counsel believe the likelihood of liability is “low” or will be covered by insurance.
One such suit, launched in a Texas court in January, is in connection with the collapse of a building last spring during a severe storm with high winds. The building, manufactured by Cover-All, was being used as a practice facility by the NFL’s Dallas Cowboys.
Cover-All’s roots in Prairie farming date back to its start in 1993, when it focused largely on cattle and dairy storage and hay shelters. The company went on to pioneer the use of membrane-covered structures as permanent buildings.
