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GN played role in demise of Kugluktuk firm

“They simply quit doing anything here the day Nunavut was created”

JANE GEORGE

Last month, the fate of Kugluktuk’s largest construction company, Mulco Ltd., was sealed for good as 34 creditors — owed $3.4 million — refused an offer to settle.

The offer to creditors would have paid them 100 cents on the dollar. They would have been paid everything Mulco owed them, plus interest — but they would have had to wait two years for repayment.

Instead, because the offer was refused by a majority of the creditors carrying most of the debt, Mulco was put into immediate bankruptcy. Trustees moved in after Sept. 7 to seize the company’s assets.

“To the principal of the company it was a huge disappointment,” said licensed trustee Darren Crocker, in a telephone interview from Edmonton.

Mulco was owned by Randy Mulder, a former resident and mayor of Kugluktuk, who moved to Alberta about 10 years ago.

Crocker said that the refusal of the offer to repay all the creditors in full was the first similar offer that he’s seen turned down in 17 years of work as a trustee.

Mulder said he would make no comment to Nunatsiaq News on the collapse of Mulco.

But his former business partner, Kerry Horn, also a creditor, said he voted against the offer based on “business reasons.”

“I thought it was misleading people. You would be dealing with people and putting them in the same place we’re already in,” Horn said from Kugluktuk. “It wasn’t going to work.”

Mulco owed Horn $450,000. He had received some cash at the time of his sell-out to Mulder, but carried an additional amount as a mortgage.

“I certainly would have liked to have the money, but I never did have it, whereas the other people who lost money, lost it right out of their pockets.”

Horn said local companies stopped dealing with Mulco when it sunk into financial difficulty.

Mulco’s creditors included Kikiak Construction, Lyall Construction, the Government of Nunavut, Qulliq Energy, NTCL, Atoyuk Service, Boothia Service, Igloo Building Service and KRT Electrical.

Horn said he was disappointed by the downward turn of Mulco after he sold his share of the business. He blames this on the lack of construction work in Kugluktuk and Mulder’s residence in Alberta.

“When I was involved, it worked because I live here,” he said. “It just doesn’t work, running and managing a business and not living here.”

Mulco was caught in a squeeze, had no cash flow, and “it snowballed,” said Horn, who feels it would have been better for the community to have Mulco still functioning.

Horn said Mulco was a “viable business” when he and Mulder started working together in 1984.

Mulco did build the arena for the Hamlet of Kugluktuk after Horn’s departure, but in an acrimonious dispute over faults in the construction, Mulco had to make a settlement with the hamlet.

Mulco also lost money over a stone-crushing contract and sued the GN. In spite of a settlement in Mulco’s favour, the work was still a money-losing venture for Mulco.

Three years ago, Manitok Thompson, then the GN’s minister of Community Government and Transportation, gave Mulco a contract for providing the gravel that would be used for the Taloyoak airport project. The contract was valued at $843,950.

But the raw material Mulco needed for the project wasn’t there, Horn said; there wasn’t anything to crush. Although Mulco sued the GN and settled for an estimated $300,000, the project was in the hole and last March, Mulco declared bankruptcy.

Horn blames the GN for the collapse of Kugluktuk’s economy.

‘They simply quit doing anything here the day Nunavut was created,” he said.

The hotel Horn owns is doing well, he said, because “more and more people are traveling to try and make things work.”

Nunavut will building 37 social housing units in Kugluktuk over the next three years and a $6 million sewage lagoon. Mulco lost those contracts, but still would have received some subcontracted work had it survived.

However, some businesses in Kugluktuk, such as Kikiak and JMS Supplies, may still be able to benefit from these two major projects.

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