A Coeur d’Alene-based company recently laid off four employees as a direct consequence of Vandervert Construction Inc. entering into receivership.
Aaron Kayser, owner of Innovative Electrical Solutions LLC, said the workers were dedicated exclusively to working on projects for the now-shuttered Spokane-based general contractor.
“I don’t think I’ll see my $144,000,” said Kayser, referring to the amount Vandervert Construction owes his company. That figure is just a little more than 14 percent of the company’s gross revenue from 2017, he said.
Innovative Electrical is one of 350 creditors—businesses, individuals and government entities—in 13 states and one Canadian province owed a total of $18.1 million by Vandervert Construction, according to Spokane County Superior Court records. At the end of 2017, the company reported $14.4 million in total assets.
Control of the 42-year-old company was placed under receivership on Feb. 2, and the company is facing imminent liquidation.
The company has done millions of dollars in business in the Tri-Cities. Recently completed projects include Panera Bread in Richland, Fred Meyer’s $12.4 million remodel in Richland and West Richland’s Roasters Coffee.
On Feb. 14, the company released a statement saying Vandervert Construction began facing financial troubles after securing bids on substantial hotel projects in Washington and Oregon. After the start of construction, “several subcontractors refused to honor bid-day pricing,” said the statement.
The Courtyard by Marriott in Pullman, and Marriott Towne Place Suites projects in Beaverton, and Lakewood, were completed last year but with cost overruns of $2 million.
“In addition to the operating losses on the hotel projects, Vandervert Construction’s cash flow issues were compounded by non-payment of third-party obligations that are owing to the company,” the statement said.
For subcontractors that are owed money, one recourse is to place liens on property on which they completed work.
Kayser said he’s placed up to nine different liens on properties where Vandervert hired Innovative Electrical to do work. Kayser said he notified those businesses and property owners of his intention to secure payment of the debt before submitting the lien.
“It makes for an uncomfortable conversation,” he said. “Now we’re getting told that they paid Vandervert (Construction) to pay us, but we never got anything. Right now, we owe supply houses and a whole bunch of subs underneath us. It makes a very large crater in the middle of the budget.”
Another Vandervert Construction creditor listed in court records is Spokane-based R&R Heating & Air Conditioning Inc. R&R has a $38,400 claim against the construction company.
“I work really hard to collect,” said R&R President Randy Hastings, of not only Vandervert, but creditors in general. “In accounts receivable, after 30 days past due, we chase our money down hard.”
Related to Vandervert, Hastings said, “There’s been a lot back-and-forth conversation I’ve had with other subs calling me. And in some instances, you can tell where they may not have been as aggressive in going after what they were owed.”
A judge appointed Spokane law firm Davidson, Backman, Medeiros PLLC to serve as the general receiver for Vandervert Construction to help the company pay off as much of its debt as possible, court records say.
Firm partner Barry Davidson said his office is moving quickly to begin the process of paying off Vandervert Construction’s creditors. The assets include $2.5 million in property and equipment, including vehicles, trailers and forklifts.
“Proceeds of sales of equipment and all other assets will be converted to cash to pay the creditors,” Davidson said.
The voluminous initial court filing detailing Vandervert’s financial obligations approaches 100 pages in length and details debts ranging from as little as $49 to Dallas-based 170-Praxair Distribution Inc., to the largest creditor, the Washington state Department of Revenue, which has a secured $2.1 million tax warrant against the construction company.
The state revenue department has a second claim, also secured, for $763,400, according to court records.
Most of the other claims against the company are unsecured.
One of the larger six-figure claims against Vandervert Construction is a $654,000 indemnity claim that lists Dick Vandervert, who founded the company in 1975.
Vandervert said that amount is for a secured line of credit Vandervert Construction owes to Washington Trust Bank for which Dick Vandervert is the guarantor. He said he was willing to serve as the co-signer on the line of credit when he sold the business to President Tim Stulc between six and seven years ago.
“(Stulc) has always made his payments on that credit line, so it hasn’t been a problem,” Dick Vandervert said. “But if the receivership doesn’t pay on it, I could end up getting stuck with some of it. In a worst-case scenario … all of it.”
Added Dick Vandervert, “It’s a sad state of affairs. I’m so disappointed at where things are now.”
Today, Dick Vandervert operates Vandervert Development LLC, which does business as Vandervert Development & Hotels and is separate from Vandervert Construction.
The 73-year-old said he sold the general contracting business because he was approaching retirement age.
“The construction business is a hard business, and you don’t do just a little of it. It takes all of your time,” he said.
Dick Vandervert said he operates 10 property businesses with holdings mostly in Spokane—and a few in north Idaho. His businesses didn’t have any active projects occurring with his former construction company.
“I at least dodged a bullet there,” he said.
A court-issued stay put a stop to all Vandervert Construction activity, and now, any potential future the company has, rests with Davidson.
Stulc gave Davidson “sole discretion and authority” regarding whether to file for federal bankruptcy protection, according to court records.
When asked about the prospect of filing bankruptcy, Davidson said, “There is no present intention at this time to move in that direction.”
Davidson said about 80 Vandervert Construction employees were laid off. However, in a strong construction economy, the majority have been offered jobs and most have returned to work at other companies, he said.
“There’s a real shortage of skilled workers in construction now, so that’s at least good news for the Vandervert workers,” Davidson said.
Doug Tweedy, a Spokane-based regional economist for the Washington state Employment Security Department, said it’s too early to determine what impact Vandervert Construction’s demise will have on the construction sector, if it has an impact at all.
“Usually, it’s a market decrease that affects the construction sector,” he said. “But the market’s been increasing the last couple of years. I can’t think of anything else to compare this to.”
The receivership marks a reversal of circumstances for Vandervert Construction, which in late 2016 described itself as being in a steep growth mode. The company had opened satellite offices in the Tri-Cities and Bellevue in recent years.
Vandervert reported $58.1 million in 2016 contract revenue, ranking the company ninth on the list of leading Spokane-area contractors as published in the Spokane Journal of Business last June.
Recently completed projects included the $11.8 million Courtyard Inn by Marriott in Pullman and the $8 million My Fresh Basket grocery store in the Kendall Yards development, northwest of downtown Spokane.
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