WATERLOO - Intelligent Mechatronic Systems Inc., a Waterloo-based company specializing in connected car technology, has been placed in receivership.

Founded in 1999 by University of Waterloo professor Otman Basir, Intelligent Mechatronic Systems (IMS) has registered more than 200 patents and patents-pending for technology related to driver and vehicle analytics, communications and safety. The firm's technology is in use by several insurers offering usage-based car insurance that determines rates based on how and where a vehicle is driven.

Last year, IMS made the Mediacorp Canada list of the top 20 employers in the Waterloo Region area, and was chosen as one of the country's top small and medium employers. At the time of the surveys, the company had 118 full-time employees, with a head office on King Street North and sales offices in the United States and Germany. The company's website says it has more than 140 employees.

Court documents indicate IMS and affiliated company Ridetones Inc. collectively owed its lenders more than $28 million as of mid-August. Those lenders are all affiliated with B.E.S.T. Funds, a Toronto-based venture capital firm that announced a $4-million investment in IMS in 2013.

The documents outline a series of failed attempts to improve the companies' financial situation. According to the documents, IMS and Ridetones have been in default of lending terms and have failed to make payments when due to their lenders since at least March 31, 2017. Attempts to secure interim financing and refinancing failed; B.E.S.T. even floated emergency funds to IMS so it could cover "critical expenses" such as payroll and payments to critical suppliers.

The documents show that a potential sale to an insurance firm in April fell apart after the prospective buyer did its due diligence and offered a significantly reduced revised offer, which IMS rejected. Another purchase proposal was quashed partly because the sale wouldn't have covered IMS' debts.

Faced again with the inability to pay its employees or critical suppliers, IMS consented to the receivership order in exchange for more emergency funds from B.E.S.T.

As recently as a week ago, IMS received more emergency funds to cover payroll; the lenders wouldn't provide additional funds for critical suppliers, and launched a receivership application under the Bankruptcy and Insolvency Act last week.

The court appointed PricewaterhouseCoopers Inc. as receiver. "The Debtors are insolvent and suffering from liquidity crises that are jeopardizing their continued operations," the documents state. A receiver is empowered to sell or liquidate a business' assets in order to repay outstanding debt.

Over the years, IMS had announced several high-profile deals and partnerships with companies interested in its products, ranging from wireless carrier Sprint to German insurer Allianz Deutschland.

IMS technology that can track the distances driven on specific highways and roads allowing jurisdictions to charge fees without needing traditional toll infrastructure has been implemented or piloted in several states.

Although someone answered the phone at IMS on Tuesday, a request for comment was not immediately returned.

bdavis@therecord.com

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Twitter: @DavisRecord