Vancouver-based unicorn Nexii Building Solutions under creditor protection

Nexii's Squamish Manufacturing Plant. (Nexii Building Solutions)

Nexii Building Solutions is now under court protection from its creditors, following a decision by the Supreme Court of British Columbia earlier this month.

The Vancouver-based company made ripples in the construction industry in recent years by developing proprietary pre-fabricated building materials, called “Nexiite,” and accompanying unique construction methods for their product. Their materials and processes combined were previously touted to significantly reduce greenhouse gas emissions, construction timelines, and costs.

They have built standalone restaurant/cafe buildings for chains such as Starbucks and Popeyes, and some of their largest projects to date entail the facades of the University District high-rise residential towers in Surrey City Centre and the nine-storey Marriott Courtyard hotel with 172 guest rooms in downtown Nanaimo, which reached completion and opened in early 2023.

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In September 2021, just 2.5 years after it was founded, Nexii Building Solutions became the fastest company in Canadian history to reach the milestone of being a “unicorn” — the term to classify a startup that reaches a valuation of over $1 billion. Shortly after, by July 2022, the company was worth over $2 billion.

Nexiite construction process. (Nexii Building Solutions)

Nexii’s Squamish Manufacturing Plant. (Nexii Building Solutions)

But filings this month suggest there were major financial challenges over this same period when the company was making headlines over its valuation.

As of this month, it owes US$79 million to creditors, including its senior secured lenders of Powerscourt Investments XXV LP, Trinity Capital, and Horizon Technology Finance. This is in addition to the US$6 million it owes to equipment suppliers, trade creditors, and landlords.

The company has been unable to service its loans from senior secured lenders. Starting in April 2023, it defaulted in the payment of interest to these entities.

Before engaging in the proceedings under the Companies’ Creditor Arrangement Act (CCAA), according to the filing, Nexii Building Solutions states it took steps to reduce costs, such as terminating staff, shutting down operations at a facility in Moose Jaw, and reducing other operating expenses. Currently, the company employs over 140 people, who are almost entirely based in Canada.

As well, in 2021, the company performed extensive redesign and testing to re-engineer its Nexiite product to improve its competitiveness and profitability in the marketplace. This process to create “Nexiite 2.0” was carried out as the growth of the business fell below expectations, and the costs were high relative to revenue.

The re-engineering process was deemed to be a success and the Nexiite product saw “strong profitability” by late 2023, but the company at this juncture had “consumed significant capital” over the past 24 months in doing so.

Additionally, Nexii Building Solutions expended extra capital when plans for their expansion manufacturing facility in Pennsylvania stalled, with the local company failing to pay their initial licensing fee of US$5 million and unable to perform due to their lack of working capital. Nexii Building Solutions incurred “significant cost” as a result of the Pennsylvania facility issues “in order to protect the Nexii brand from potential project defaults.”

Currently, the company has four ongoing construction projects nearing completion. Another six projects are under contract, but construction is not underway.

A Popeyes restaurant building built out of Nexiite. (Nexii Building Solutions)

Marriott Courtyard Hotel in downtown Nanaimo, built out of Nexiite. (Nexii Building Solutions)

“Nexii believes its underlying business is strong, including the proprietary material and systems, particularly in the current market since there is a premium placed on sustainable and environmentally conscious building practices,” reads the filing.

The court has appointed KSV Restructuring as a monitor of Nexii Building Solutions. The company intends to launch the sale process for its business and assets at around January 22, 2024, when the current court protections from creditors end, and when the next hearing is scheduled. Origin Merchant Partners will lead the sale process, with oversight by KSV Restructuring.

“Nexii remains committed to delivering its innovative and revolutionary sustainable products and services to the market,” said Bill Tucker, CEO of Nexii Building Solutions, in a statement.

“This decision marks a pivotal moment for the Company as we work diligently with all stakeholders to secure a strong and sustainable future.”

To date, Nexii Building Solutions has raised over US$250 million in funding towards the development and growth of its business. Its executive team includes former Vancouver mayor Gregor Robertson, and it has a significant bench of advisors, entailing high-profile individuals such as Ronald Sugar (chairperson of Uber and board member of Apple), Marillyn Hewson (former CEO of Lockheed Martin Corporation), David Taylor (executive chairman of Procter & Gamble), and Mike Roberts (former global president of McDonald’s).

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