Many suppliers of Vancouver’s Mountain Equipment Co. (MEC) say the iconic outdoor-wear retailer is behind in paying its invoices.
Several have launched lawsuits.
This comes amid reports that the 54-year-old company is angling for a corporate sale for the second time in five years.
B.C. Supreme Court in October 2020 approved MEC’s sale to Kingswood Capital Management after MEC had been in creditor protection. Kingswood is a Los Angeles-based investment firm that has separate owners and no connection to Kingswood Capital Corp. or Kingswood Properties, which are holdings of Vancouver’s Segal family.
Hong Kong-based Lever Style Ltd. on Feb. 12 filed the largest of several recent lawsuits against MEC, seeking more than $1.3 million because MEC allegedly failed to fully pay dozens of invoices sent in September and October.
MEC paid Lever US$295,997.67, but US$917,452.77 remains outstanding, Lever wrote in its notice of civil claim in B.C. Supreme Court.
Lever’s lawsuit alleges that MEC has “acknowledged liability for the outstanding balance.”
It added that MEC “asserted that the only reason the outstanding balance has not been paid is because MEC and/or MEC Holdings does not have the financial capabilities to pay.”
BIV asked MEC for a response to the lawsuit and spokeswoman Jo Salamon responded in an email, “as MEC is a privately held company, it doesn’t comment on business.”
She added that “regarding speculation on MEC being sold—there is no news to share.”
Other lawsuits against MEC are for smaller amounts.
“Our outstanding invoice is for a whopping US$2,100 so it is nothing like that million-dollar lawsuit,” said Jonthan Cotton, director of operations at FixnZip, which makes zipper repair kits and is based in Oregon.
“It’s hard to get responses from them, and it’s usually an evolving, changing story, where they give us a date for what they’re going to do, and then when we get there, they need more time.”
Cotton told BIV that FixnZip sent MEC supplies in April.
MEC’s latest proposal, Cotton said, was to start paying US$100 each month starting in March, and then the balance in December.
Vancouver-based socks and slippers maker Polar Feet is another small business alleging that MEC owes it money.
Polar Feet claims it has been waiting to be fully paid for sock shipments since it invoiced MEC late October 2023.
It said in a lawsuit filed Jan. 29 in B.C. Small Claims Court that it invoiced MEC for $63,510.59 but was only paid $40,485.59. Its lawsuit sought $26,294.59, after adding service fees and interest on the outstanding balance.
“I think they have not paid because they think Polar Feet is insignificant and can be put off indefinitely,” Polar Feet said in its notice of claim.
“They promised to pay three times but did not pay, nor did they get in touch as they promised,” Polar Feet said in its lawsuit.
Polar Feet owner Lisa Falconer emailed BIV on Feb. 21 to say that while MEC has still not paid her outstanding balance, she and MEC have “come to an agreement” and she plans to discontinue her lawsuit. “They seem to be making an effort to close outstanding claims and to revitalize the business,” Falconer said.
U.K.-based Lifemarque Ltd., which makes outdoor survival products, filed a lawsuit against MEC on Jan. 27.
Lifemarque’s lawsuit said it sent US$27,000.28 worth of products to MEC last March and April.
“MEC has neglected or refused to pay the indebtedness, despite its obligations under the agreement and multiple demands by Lifemarque that it do so,” Lifemarque said in its lawsuit.
None of the allegations in the lawsuits have been proven in court. MEC had not filed responses to the notices of civil claim at press deadline.
Retail consultant and DIG360 principal David Ian Gray, who counted MEC as a client many years ago, told BIV that other outdoor retailers are floundering.
Some observers have suggested in Reddit threads that U.S. retailer Recreational Equipment Inc. (REI) would make a good corporate parent for MEC.
Gray doubts that transaction would materialize.
“REI has been struggling themselves for a bit, so they wouldn’t be in a position where they could make an acquisition like that,” he said.
“A new buyer for MEC is probably going to be another private equity company. The starter list for that could be the ones that missed out in the last go-round.”
Names of other bidders for MEC when the company was last in creditor protection have not been made public.
MEC in late 2023 had 22 stand-alone stores across the country and three stores within Hudson’s Bay Co. (HBC) locations in Toronto.
CEO Peter Hlynsky told BIV at the time that he planned to open “three to four” stand-alone stores per year, increase the company’s stand-alone store count to 40 stores by 2028 and then continue to grow.
MEC’s website now lists 26 locations, including two in HBC stores.
