NexInnovations has shut its doors for business.
According to sources, NexInnovations employees have been instructed to stay home as of Oct.2 and to return company owned computer equipment.
Just over a year after it first filed for creditor protection, CDN has learned NexInnovations Inc., one of Canada’s largest solutions providers, has once again run into financial difficulty.
A spokesperson for NexInnovations could not be reached for comment. However, Tech Data Canada has confirmed that according to public documents, NexInnovations has again filed for protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA).
Ed Vos, president of ONX, told CDN that the CCAA has been informed that the leadership team at NexInnovations is no longer in place and that they have hired a company that is a restructuring specialist.
Vos does not know who those companies are.
Vos also said that an outside firm has been hired to optimize the assets that still remain inside NexInnovations. He again does not know who that company is or who hired them, whether it was the court or NexInnovations itself.
“My position is that this is very unfortunate what happened to NexInnovations and that Hubert Kelly is a first class guy,” Vos said.
Vos believes that the fall out of NexInnovations will create an upside for most of the top solution providers in Canada.
When NexInnovations first filed for creditor protection in 2006, its major creditors included Tech Data, Wachovia Capital Finance Corp. and IBM Canada Ltd. Two of those companies now say however they are no longer owed money by NexInnovations.
Wachovia is not involved in the recent developments says Mark Laugesen, a partner with Bennett Jones LLP, representing Wachovia.
“Wachovia was involved in the last filing, and Wachovia was paid-out in full,” said Laugesen. “They’re not owed money any longer by NexInnovations, that debt was extinguished. They’re not involved in the current filing”
While he declined to comment on the recent developments, IBM Canada spokesperson Mike Boden did confirm IBM Canada is no longer a NexInniovations creditor either.
Representatives for TechData Canada declined to comment on the specifics of the NexInnovations case, instead releasing a general statement reaffirming the distributor’s support for the channel.
“Our resellers operate in an extremely competitive marketplace, and we are committed to maintaining our role as an unbiased supplier dedicated to help them achieve their business goals,” said TechData in a statement. “Tech Data maintains its commitment to the channel and will continue its business relationships and operations with the utmost in ethics, integrity and respect for all our customers, large and small. To comment on specific customer performance is against Tech Data policy.”
As one of Canada’s largest solutions providers, Mississauga, Ont.-based NexInnovations was one of CDN’s Top 100 Solution Providers, and according to that list, in 2005 the company reported revenues of between $500 and $550 million.
It had earlier filed for and was granted creditor protection in August 2006 for a 30-day period, to allow the company time to restructure, citing financial difficulties. At that time Hubert Kelly, NexInnovations’ president and CEO, told CDN the company’s limitations on working capital were caused by average price points dropping by 15 to 20 per cent.
“The decision to do a CCAA was difficult and we explored and exhausted every option for several months. If you asked me about this approach a couple of weeks ago I would tell you it would not be the course of action,” Kelly said at the time.
At press time it is still unknown what led to NexInnovations financial troubles or who had a hand in bring down the company.
CDN will be updating this story throughout as news develops, so check back to www.itbusiness.ca for more.