A contracting company being probed by police for allegedly defrauding customers has filed for bankruptcy, saying it owes more than $2 million to dozens of creditors.

The move makes it unlikely that homeowners in western Labrador who paid tens of thousands of dollars for never-completed renovations will get their money back.

ADDAHome Development Inc. started bankruptcy proceedings on April 5, according to documents obtained by CBC News.

The Royal Newfoundland Constabulary launched an investigation into ADDAHome in December, within 24 hours of a CBC report on the company’s activities.

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Bill Dormody — pictured in a 2011 file image — is one of the principals behind ADDAHome Development Inc. (CBC)

​ADDAHome took cash for renovation work it never finished on homes in western Labrador last summer, while facing a raft of lawsuits linked to a failed subdivision plan in central Newfoundland.

The company’s creditors are from both those regions, plus others around the province.

More than a dozen ADDAHome employees are owed a combined total of $21,000 in unpaid wages, according to the bankruptcy filings.

A number of companies and public bodies are also listed as creditors.

They include:

  • Canada Revenue Agency: $422,000.
  • K.D.J. Enterprises: $216,564.
  • Exploits Home Hardware: $114,852.
  • Stan Dawe Ltd.: $110,107.
  • The Town of Grand Falls-Windsor: $35,000.
  • The Workplace Health, Safety and Compensation Commission: $8,075.
  • The Town of Labrador City: $5,500.

A Wabush-based company, Stagg and Templeman Construction, is listed in the bankruptcy filings as being owed $74,500.

Homeowners in western Labrador told CBC News last fall that local companies came to their doors looking for money for supplies — cash that had already been paid to ADDAHome.

In total, there are 77 unsecured debts to creditors.

‘These people deserve their money'

In mid-December, Bill Dormody, one of the principals behind ADDAHome, insisted that unhappy customers in western Labrador would get their money back.

"I have done nothing wrong, and these people deserve their money, and they're going to get their money," Dormody said in voice mail message left with CBC News on Dec. 12.

"And it looks as though I'll have confirmation, I have it this evening, but I won't have it in writing until tomorrow, that I have the money to go in and pay back the ones who I owe the money to."

The company’s bankruptcy filings mean that is not likely to happen.

Several of the homeowners interviewed last fall by CBC News are listed as still being owed cash by the company.

2 properties only assets

The only assets ADDAHome says it has are two pieces of land in Grand Falls-Windsor.

The bankruptcy filings put the total value of those properties at $1.2 million.

The land in question has been up for sale for more than a year, and TD Waterhouse is listed as a secured creditor of $300,000 on the properties.

The first meeting of ADDAHome creditors is scheduled for April 19.