Modular construction is a catch-all term for buildings that are partly built in factories, covering everything from prefabricated panels that connect together to entire tiny homes.Thomas Peipert/The Associated Press
A Hamilton-area modular-home builder faces a court-ordered receivership process with creditors seeking repayment of more than $17-million, but still believes the future is bright for prefabricated homes.
“Were there barriers in the market? Absolutely; this is an up and coming industry, we’re going to see a lot of people coming into the market being unsuccessful. If 100 are coming maybe 95 won’t be successful for many reasons, good or bad,” said Ali Kerem Ozden, owner and president of BECC Construction Inc., who hopes his company can be restructured through the receivership process.
BECC’s built nearly-complete pods that are connected like Lego blocks on site. But on May 29, Ontario Superior Court Justice Liza Sheard appointed KPMG Inc. as receiver over several BECC companies (BECC Construction, Dali Drywall Ltd. and Massive Devcon Corporation) at the urging of Royal Bank of Canada, which said Mr. Ozden’s companies violated several conditions of loans to his various companies. The combined debt RBC is seeking to recover is more than $7.4-million, while Mr. Ozden’s unsecured creditors – a mix of suppliers and subcontractors mainly – are owed more than $6.6-million.
Modular construction is a catch-all term for buildings that are partly built in factories, covering everything from prefabricated panels that connect together to entire tiny homes. During his election campaign earlier this year, Prime Minister Mark Carney pitched modular manufacturing as key to solving Canada’s housing affordability challenges, partly because it holds the possibility of significantly lowering construction costs.
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Mr. Ozden said he got his start in construction when he came to Canada 23 years ago, founded a drywall contracting company in 2012 and moved into modular home-building in 2020. Despite his company’s financial issues he still believes modular can succeed. “I haven’t given up this vision: I don’t see any problem with clients or customers, there was a lot of interest. We were delivering multiple projects – with school boards, First Nations – every day modules were coming out of our factory and getting delivered,” he said.
In February, 2024, BECC received a $2.5-million investment from the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), that was “one of the many ways the Government of Canada is working to increase the supply of attainable homes,” according to a press release issued at the time. The loan, which does not accrue interest, was aimed at expanding his business to produce more than 2,000 housing modules a year. Mr. Ozden said he was not able to approach that level of production.
Leith Moore, principal and co-founder of panelized modular builder Assembly Corporation, said the issue for everyone in the prefabricated homes business is consistent demand. “If you have a plant, the challenge is keeping it full, it’s gotta keep moving. Where is the pipeline? Our new plant is going to cost $20-million, to do that you need a consistent supply [of orders],” he said. In Sweden, for example, he said the government had a program of providing a floor of orders for new modular builders that helped that industry become a leading source of new housing.
During his election campaign, Prime Minister Mark Carney pitched modular manufacturing as key to solving Canada’s housing affordability challenges.Amber Bracken/Reuters
Shortly after the FedDev Ontario announcement, Western Surety Company filed a statement of claim in Ontario Superior Court in May, 2024, seeking more than $8-million related to alleged nonperformance of BECC on several projects. Western provides surety bonds, which offer more financial flexibility for builders than letters of credit. Canadian municipalities increasingly accept such bonds as guarantees when contracting out work to private companies.
After founding his modular construction company in 2020, Mr. Ozden and BECC had won contracts to build affordable housing projects with the City of Chatham-Kent, the County of Lambton and Ottawa Community Housing Corporation. However, the company saw all three of those contracts get cancelled in 2024 for a mix of cost overruns and delivery delays on their part. In all three cases, the municipal projects won performance settlements from Western worth millions of dollars, which in turn sued Mr. Ozden’s companies to recover those costs.
In a statement of defence, Mr. Ozden’s lawyers blamed Western for some of these failures. The statement argues the bond company “acted in an arbitrary and unreasonable manner” when it “reached out to various owners, including, but not limited to Chatham-Kent to inquire about performance issues of BECC.”
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The statement continues: “In doing this, Western created doubt and concern on the part of Chatham-Kent, that did not exist at that time, on whether BECC would be able to complete the work.” The court filing also alleged OCH wrongfully terminated its contract with BECC and that Lambton also owed BECC money related to cost overruns outlined in its contract.
While Western was not successful in all of its claims, on June 18, 2025, BECC was ordered by Superior Court Judge Robert Centa to pay a judgment of $3.9-million.
In an affidavit from Philip O’Gorman, a senior manager in the special loans and advisory services group for RBC, the bank asked the court to appoint a receiver because Mr. Ozden’s companies “failed to immediately advise the lender of any unfavourable change in its financial position which may adversely affect its ability to pay or perform its obligations.” The bank alleges BECC also failed to get its consent to take on new loan obligations and entering into banking arrangements with Bank of Montreal and TD Bank against the instructions of the credit agreement.
Mr. Ozden said his company was attempting to finalize an acquisition by a foreign investor; a fact described in the initial receivership order that granted a short grace period to assess that deal (which ultimately fell through).
“It is a business that requires a lot of capital,” Mr. Ozden said. “We bootstrapped it, we had these projects and had a proof of concept. The next stage for us was acquiring technology as well as capital to scale up. It has to be patient capital; you may be losing money for three years.”