Toronto-based ThoughtWire, which sells AI-powered digital twin software to medical service providers, is exploring a sale after entering creditor protection.
The news: As first reported by Insolvency Insider, ThoughtWire filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act in early August. According to court documents, the move came after ThoughtWire failed to rebound from the impact of COVID-19 and the high debt burden that it had amassed to fuel its growth. ThoughtWire has since launched an Ontario Superior Court of Justice-approved process to find other interested acquirers or investors by October 20. ThoughtWireâs two private secured creditorsâmajority shareholder Josip Kozar, as well as Hole Medicalâhave formed a numbered company and agreed to buy ThoughtWire in a âstalking horse bidâ should it neglect to find a better offer.
From the source: Eight years ago, ThoughtWire was flying high. The company had more than $5 million in annual sales and was planning to grow to 100 employees after securing $20 million in equity and debt financing from a group that included Yaletown Partners, BDC Capital, Round13 Capital, Epic Capital, and Comerica, among others. Now, ThoughtWireâs future is uncertain, and it could sell for a small fraction of that amount.
The context: Founded in 2009 by former CEO Mike Monteith, CTO Stephen Owens, and executive vice-president Dale Hall, ThoughtWire developed a tech platform to help companies automate and optimize building management. However, despite restructuring efforts that converted the majority of its liabilities to equity, the company struggled to grow its business and meet its obligations to creditors given its high operating costs, including what was once a 40-person workforce that has since dwindled. Amid these conditions, ThoughtWireâs revenue has declined over the past two years, and all but three of its remaining staff were terminated by March 2026.
Final thought: While ThoughtWireâs business was more acutely impacted by COVID-19, it is also far from the only Canadian tech company that has struggled to financially recover after loading up on debt. London, Ontario-based payment processing company Paystone is currently navigating a similar situation following a debt-fuelled acquisition spree. While debt can help companies rapidly expand without dilution, rigid repayment terms can often be their undoing when growth stalls.
Feature image courtsey Unsplash. Photo by Ronaldo Pangan.