Bankruptcy trustees in Calgary are gearing up for more business because of the recent financial crunch, which forced a developer and a junior oil and gas company into receivership.
A Calgary judge appointed a receiver this week to take over the $135-million Solara Resort & Spa in Canmore after K2 Developments applied for protection from its creditors.
Court documents show the company defaulted on its loan arrangements and is at least $5 million in debt.
On Sept. 30, CBC News reported that construction had stopped on the luxury complex after K2 Developments ran into trouble securing the final $3 million in financing.
At the time, the president of the company said he only expected the shutdown to last a week. Fifty of the buildings 214 units were still for sale.
A call to Solara's sales office was answered by someone who said the developer is now in the hands of receiver PricewaterhouseCoopers.
3 Calgary condo projects halted
"Things aren't as robust anymore and companies that have had to rely on debt are starting to suffer some pains with respect to dealing with that debt," said Vic Kroeger, a bankruptcy trustee with Deloitte & Touche, on Friday.
"For some companies it's the ultimate [pain]. They either go into receivership or they go into bankruptcy."
Kroeger said a junior oil and gas company also went into receivership this week, but declined to name it.
'Until the situation, the whole worldwide economy straightens itself out, there's going to be turmoil and turmoil does create failures.' — Vic Kroeger, bankruptcy trustee
At least three condo projects in Calgary have halted construction amid rising construction costs, falling prices and slow sales.
Kroeger said his office has been getting busier over the last few months, with most meetings happening with companies in oil and gas, housing and agriculture looking to head off receivership or bankruptcy.
"Until the situation, the whole worldwide economy straightens itself out, there's going to be turmoil and turmoil does create failures," he said.
David Allwright, the associate dean of the Bissett School of Business at Mount Royal College, said the increase in failing companies could be considered a bit of a correction because firms go bankrupt in even the best economic times.
"The fact that you're seeing more now is probably more of an indication of the fact that you haven't been seeing as many as you normally would in previous years," he said.
"So an increase in bankruptcy in many ways means we're just simply getting back to normal. Although in Calgary 'normal' is just that two-week period between the boom and the bust."
Calls to counselling agencies jump
In another development, two Calgary counselling agencies say they've seen a jump in calls since the financial slowdown began.
The Calgary Counselling Centre said its volume is up by 24 per cent compared to last month.
Psychologist Patrick Keelan says many people are calling for help with depression, anxiety and stress.
"You have less disposable income available to engage in stress-relieving activities that you might have done regularly, as many of those things cost money — you know, working out at a club or attending leisure time activities," he said.
The Calgary Distress Centre said their calls jumped by 18 per cent in September compared with August. The centre's Paul Bartel said they're getting more phone calls from homeowners worried about making their mortgage payments.