Going for Broke: On Bankruptcy and Business Development

Dan Seljak reflects on the closure of acclaimed firm Brook McIlroy, the challenges of architectural marketing, and the joys of urban advocacy. 

Photo by Dan Seljak: A photo of the T3 Complex on Sterling Road, which housed Brook McIlroy's Toronto office.

The first thing I learned about bankruptcy is that there’s no shame in it. For journalists, at least, insolvency is almost a rite of passage — one that most of my colleagues in the media have experienced at least once. In fact, at least a third of all publications I’ve ever freelanced for have gone out of business over the last decade. I recently went through it myself, when my last employer, Azure Magazine, entered bankruptcy protection before being sold to Florida-based Sandow Design Group. I lost my job the day the deal closed. In architecture, meanwhile, bankrupt practitioners have the likes of Arthur Erickson and Ron Thom for company, with some of Canada’s most storied design careers marked by insolvency. 

The second thing I learned about bankruptcy is how painstakingly it breaks your heart. At Azure, we learned what was happening the day the magazine entered bankruptcy protection, initiating a 90-day court-supervised effort to sell the business. The next three months passed in churning thoughts and restless nights. What happens next? Will I still have a job after the sale? How will I pay the rent? Last month, these feelings flooded back when I heard about the abrupt closure of Brook McIlroy, a Toronto firm I’ve long admired for its rigorous integration of architecture and landscape, as well as the outstanding work of its Indigenous Design Studio, led by Ryan Gorrie. I got the news from social media; from posts by friends and colleagues. As principal Trish Clarke put it on LinkedIn, “Brook McIlroy has declared bankruptcy — unexpectedly and all at once.”  

The third thing I learned about bankruptcy is how little it leaves you with. By the time a business goes under, there’s usually nothing left for severance pay. Instead, former employees become creditors, joining landlords, suppliers and subcontractors on a long list of unpaid bills. In lieu, the federal Workplace Earner Protection Program (WEPP) covers up to about $9,000 of unpaid wages, vacation pay, termination and severance. Although it cushions the blow, it is usually a fraction of what long-tenured employees are owed. 

The fourth thing I learned about bankruptcy is that it’s a matter of public record. Shortly after a corporate insolvency filing, you can Google the whole thing, unearthing legal documents and lists of debtors, all by searching the company name and the word “insolvency.” That’s how I found my own name on the creditor ledger, along with a basic forensic account of Azure’s finances and (a few weeks later) the $304,631.25 sale price. It wasn’t much fun. Airing out the laundry tends to be humiliating for almost all parties involved; the clearest winners are lawyers and bankruptcy trustees, who pull in six-figure fees for relatively prosaic work. 

The last thing I learned about bankruptcy is that it’s hard to talk about. When it’s all starting, your bosses will tell you to keep it close to the chest — and for good reason. Whether a company is trying to navigate a way out of bankruptcy protection or complete a sale, maintaining a sense of calm and normalcy helps. Even after a sale or bankruptcy closes, there’s an understandable urge to keep mum, whether to aid in the creation of a new business designed to salvage former clients, or simply to ensure a smooth transition for the new owners. I’m sympathetic to these pressures, but uncomfortable with the results. 

For both Azure and Brook McIlroy, bankruptcies played out in whisper networks of rumours and broken-telephone cocktail party banter. It meant we often ended up getting the facts wrong. It also meant we’ve left a strange civic void, when institutions that helped shape our nation’s design culture either transformed or disappeared without so much as a public acknowledgement, a celebration of their legacies or a critical reflection. Our industry is already too full of things everybody knows but nobody is willing to say out loud. More acutely, a lot of people lost their jobs — and talking about it can help them find new ones. 

Dan Seljak feels the same way. An architectural marketing professional and a prominent civic advocate, Seljak was Brook McIlroy’s last marketing director. Their office, as it happens, was just down the street from Azure’s on Toronto’s Sterling Road. Up to the day Azure went bankrupt, I’d been looking forward to catching up with Dan — along with my friend Khatereh Baharikhoob, a hugely talented urban designer who had recently joined Brook McIlroy as a principal — over coffee. The days slipped by and it didn’t happen. In the end, Dan and I had a very different cup of coffee. In the end, our firms shared the same bankruptcy trustee. 

Bankruptcy sucks. It’s been over four months for me — maybe seven months if we’re counting the three months of bankruptcy protection — and I’d be lying if I told you I’ve gotten over it. It’s a lot fresher for you, and I hope you’re holding up okay. How are you feeling? 

Dan Seljak: Pretty good, all things considered. You know, I've been doing architectural marketing and business development for about 15 years now, with a sort of side-hustle in urbanist cheerleading and activism. First off, one of the benefits of losing your job in a very public way — and where everyone knows it’s not your fault — is that it's really nice to have everyone come forward. 

People I’ve known throughout my entire career have come forward with support, whether it’s individuals I’ve worked with, or just folks that have heard about things I’ve done. People have been really kind. So it’s been very heartening, and I take it as proof that sticking to this industry has been worth it. 

I had a similar experience. I was feeling pretty down about myself when I posted about Azure going bankrupt and losing my job on LinkedIn. The way people reacted was hugely touching. At the same time, I hesitated to divulge in the first place. I kept thinking to myself: Am I supposed to be talking about this?

Yeah, there’s definitely an element of that. I’ve kind of joked about the bankruptcy on social media, and I’ve gotten a little bit of scrutiny about it — maybe even some judgement. I think that for previous generations, bankruptcy and unemployment were things you weren’t supposed to talk about, at least not publicly. 

But that’s one of the interesting things about the dual role I’ve had over the years. I work in architectural marketing, but I’m also someone who — for lack of a better word — operates as a sort of micro-influencer in this space. I tend to be much more transparent, and much more willing to share details of my private life. 

I wonder if our Canadian sensibilities come into play. When it comes to Brook McIlroy, I know that publishing a piece about the firm with “bankruptcy” in the headline might be perceived as a slap in the face. I’m sensitive to that. On balance, however, I think it’s worse if we don’t say anything publicly and pretend like nothing happened.

With Brook McIlroy, I think there are a few reasons why it’s important to talk about it. One is the legacy of the firm, which I’d argue has contributed a lot to the Canadian design landscape. Over the last 15 years or so, the work with Ryan Gorrie and the Indigenous Design Studio has been really meaningful. From the Ziibiing gathering space at the University of Toronto to the Spirit Garden on the Thunder Bay waterfront, I think that there was groundbreaking work, and some excellent projects. This was also part of a hugely important wave of investment in Indigenous design across Canada. 

Going further back, the practice that Cal Brook and Anne McIlroy built over the past 26 years has been an important part of design culture in Toronto and beyond. Beyond the built work, I think that the practice helped shape Canadian urbanism in important ways. One example is the Toronto Mid-Rise and Avenues Neighbourhood Study, which helped shape the city’s mid-rise design guidelines, as well as a generation of urbanism that influenced the evolution of Toronto and cities across Canada. There are a bunch of examples like that, and there are traces of the firm’s influence across a generation of urban and architectural thought. So it’s worth paying tribute to that legacy, celebrating it, critiquing it, unpacking its meaning, and even grieving it.

But the biggest reason why it’s important to talk about it is because a whole bunch of people suddenly lost their jobs. A lot of my former colleagues are out there looking for work, and I think that having some kind of public reckoning — or at least an acknowledgement — of what happened can make that process easier. 

It’s painful when this happens, but maybe it can hopefully teach us something about the industry. Not long before Brook McIlroy went bankrupt, B+H Architects — a much larger Canadian firm — filed for creditor protection, leading to a sale of the business to Singaporean consulting giant Surbana Jurong. It stemmed from a project in the UAE, where B+H was held liable for a $25 million construction defect. 

It invited a conversation about the degree of liability that architecture firms take on, and how to manage that risk – particularly when it comes to international work. Obviously, the situation at Brook McIlroy is very different. From your point of view, are there any lessons to take away from it? 

I say this with affection for architects everywhere, but I think that our business practices on the whole tend to be a little bit archaic. And there’s reasons for this. While architects take on a lot of risk and professional liability — like doctors or lawyers — the business realities aren’t really taught in school. On top of that, this is a very economically challenging time for these industries — very little new construction is starting. So the first thing for architects to do is to take a really close look at their books, and understand what it takes to survive in a climate like this. 

Having said that, there aren’t a whole lot of businesses with 26 years of history and 40 employees that just disappear overnight. Clearly something was a little bit more awry with Brook McIlroy. 

I really feel for everyone involved. According to public documents, the firm faced “escalating costs and complexities including projects requiring additional work, contractor disputes and extensive project delays… Extra billings were rendered but, in certain cases, these were not paid by customers.” A lot of practitioners will read that and think — there but for the grace of God go I. The same could happen to anyone. Clients can stop paying without any real mistakes on the architect’s part. How did it look from your perspective? 

Beyond what’s already public, I can’t really speculate. The books weren’t open to us as employees. The co-founders were the only two equity-holding partners in the firm, and they were the only ones to have the full picture. 

I’ve worked at a fairly wide range of firms — including B+H, actually. I also spent several years at Gensler, which is completely employee-owned. The good thing about that is that the books are open, and you can see the finances as an employee. So if there’s a difficult economic situation, or the firm has lost out on a few important projects, and you’re worried about getting laid off, you can almost predict it. You can open up the books, see what’s happening. You’ll have a pretty good idea if something’s about to happen. 

The fact that very few of us really knew what was going on is itself an important lesson. Based on what I’ve heard from industry colleagues, and also what I observed from within the studio, is that a large part of what happened had to do with succession planning. Most firms of this size and age would have a layer of middle managers who are also part owners, with leadership transitioning to a broader group of people. With that comes a greater familiarity with contemporary architectural business practice and contemporary book keeping. 

At Brook McIlroy, it started too late. They promoted a new crop of principals a couple of months before the firm went bankrupt, but they still didn’t actually have any equity in the business. It was too little too late, and I think that’s a real shame. 

In fairness, succession planning is a chronic difficulty for architecture firms. When I think of boutique local firms that have retained (or grown) their design reputations over multiple generations, the list is pretty short. Moriyama Teshima Architects (MTA) comes to mind, along with MJMA. And recently, the rebranding of Kohn Shnier Architects as KSA — with Maggie Benedsen and Amin Ebrahim stepping into senior leadership roles — is another promising example. Otherwise, it’s more common for design firms to transition into becoming more service-oriented architects of record, or to get absorbed through mergers and acquisitions. 

I remember watching a tribute film to the late Claude Cormier at the Daniels Faculty of Architecture last year, at an event organized by the Cultural Landscapes Foundation. One of the things I learned from it is that Claude actually started succession planning well before his cancer diagnosis, and that opening up the firm to a new generation of leaders — when he was still in his 50s — was one of his proudest achievements. Today, CCxA is winning awards left, right and centre. One of the reasons why that story stayed with me is because it’s pretty atypical in our industry. 

One of the things I usually do now is ask about succession in job interviews. I think I’ve reached a point in my career where it hopefully doesn’t come across as disrespectful to sort of kick the tires on a company before working with them. Who’s next in line? Do you have a succession framework? And how’s it working out? These types of questions aren’t just a way of assessing the firm, they’re also really important to my job in marketing and business development. 

I briefly worked in architectural marketing myself, though I wasn’t very good at it. In fact, I never really understood what good architectural business development actually entailed. I more or less know how to get work — whether it’s freelance journalism or architectural consulting gigs — for myself as a writer, but helping practitioners get work is a whole other ballgame. How can marketing professionals help firms win work? Or even plan for succession? 

If a firm has a succession framework in place, there’s actually a lot you can do. One of the things I’ve been tasked with doing at previous jobs is creating what I call a “shadow org chart” to track the firm’s relationships. It starts with understanding a few basic questions: Who are your most profitable clients? Who are your repeat clients? From there, you map out what the relationships look like. So, for example, maybe your firm’s founding partner has a really well-established relationship with the CEO of your client. Then you’d look at who your client’s vice president is, for example, and you’d see if you can cultivate a relationship with one of your senior associates, and maybe one of their project managers can have a relationship with one of your associates, and so on.  

At a larger firm, an exercise like this might be conducted for your top 10 or 20 clients. This only tends to happen at bigger firms, for a couple of reasons. Firstly, because it’s non-billable overhead, and secondly, because it requires a degree of business expertise beyond what little architects are taught in school.  

More generally, I think that architectural marketing isn’t particularly well understood as a field. It’s still relatively new, particularly in Canada. The first important distinction to make is between sales and marketing. When architects think about marketing, they typically see it through the lens of RFPs. Specifically, they tend to think about it in terms of “win rate,” with the primary job of a marketing department being to increase the proportion of successful RFP responses. 

First of all, RFPs aren’t a marketing strategy. They’re a sales document, albeit one that may include marketing materials within. One of the things I tell companies is that I don’t think we can fundamentally impact win rate as marketers. Our job is to make the process as smooth and efficient as possible, but a marketing team isn’t going to win you work. 

You have to start with the scoring matrix for RFPs. It’s contingent on experience, project methodology, it’s contingent on fees, and it’s contingent on the relationships that architects have with clients. There are meaningful things that the marketing team can influence, of course, like making sure that you hit the right criteria, don’t get disqualified, and that the proposal itself looks good visually. All of this matters, but it’s secondary to fee structure and project methodology, which isn’t something that the marketing team decides. Of course it’s important that it’s well written and nicely formatted, but it’s not fundamentally how work is won or lost. 

The problems with RFP responses are fundamentally a product of a broken procurement system. In the Canadian public sector, past experience and low fees are paramount. It limits who gets to shape our built environment, and the types of ideas that are expressed. Moreover, it means that companies can effectively buy work, and it encourages a race to the bottom with regard to fees, which is ultimately bad for architectural labour and design culture alike.

It’s absolutely a race to the bottom. It also encourages a certain type of behaviour regarding fee structure. I wouldn't call it unscrupulous, but a growing number of firms have gotten quite sophisticated in finding ways around low-ball fees. To win an RFP, it starts with a “sticker price” that’s quite low, but then some costs can be recouped via careful terms and conditions in the contract. Added fees for change orders are an obvious example, but there are also sorts of things that a savvy firm can do.

Another thing that happens is project timelines regularly get stretched, delayed and compressed. So a client may effectively go dormant for six months, before coming back and asking for six months worth of work in two weeks. A sophisticated firm would have clauses in the contract to account for that, to impose a financial penalty for the loss. But all of this can be as much of an art as a science. Oftentimes, it depends on the relationships architects have with their clients. If there’s mutual trust, the architects can be honest and tell the client “look, here’s what’s realistic.” 

It goes back to how difficult it is to run a successful business. It’s a fine line between losing money on low fees to almost being perceived as a charlatan, and how well that’s navigated often comes down to relationships. At the same time, architects should be more analytical with regard to how money is made and lost. 

There’s a tendency to view every project as a unique, bespoke creation, and to treat everything — including the contract — as a one-off. But it’s worth looking at the patterns. If you’ve lost money for the last three projects you’ve done, you need to look at where that happened. It’s fundamentally a very high-risk industry, but if you can apply a certain rigor and predictability to how you deliver a project, the exclusions that you include in contracts, the terms and conditions that you set, then everyone's on the same page and knows the way forward. 

I think a lot of it comes back to the fact that architects just aren’t taught about the realities of operating a business. Even in the RFP process, I’ll often see designers obsessing over a beautiful, diagrammatic view of the project to show a complete and robust understanding. The problem, again, is in the scoring matrix, where that drawing goes under “project understanding,” which might be worth five points out of 100. And then the approach and methodology section is 50 points, and the fee is 40. So you’ve spent maybe 80% of your time on something that does very little to win you the project. 

Jason Thorne, Alejandra Bravo, Olivia Chow, Dan Seljak

I sympathize with the architects. Having a well thought-out design approach and site understanding should be how work is won, and being really clever around how fees and contracts are structured shouldn’t be the determining factor in successfully doing public-sector work. One way to look at it is that what designers are taught in school essentially prepares them for the profession as it ought to be, not as it is. In a sense, crits and pin-ups and studio presentations are all a preparation for design competitions. The trouble is we have very few of those in Canada, though hopefully that’s changing. 

But let’s end on a happier note. Alongside your career in architectural marketing, you’ve built out a really unique civic presence through social media and your “Another Glass Box” newsletter. In particular, your activism — including a lot of social media work and fundraising — was pivotal to expanding retail in Toronto’s neighbourhoods. It started with a regulatory fight over whether a corner store should be allowed to serve coffee, and it ended with a celebratory photo of you with Mayor Olivia Chow, Chief Planner Jason Thorne, and City Councillor Alejandra Bravo, newly legal coffees in hand. Just the other day, you led a Jane’s Walk about it! Tell me about your advocacy. 

When I was starting my career, I wanted to be a writer. I wanted to be an Alex Bozikovic, a Shawn Micallef, a Jay Pitter. Someone who chronicles the life and politics of the city through the lens of architecture and the built environment. Obviously that’s a tough field to break into. But as I started my career in architectural marketing, I also kept going to events, and I volunteered and worked with non-profits and advocacy organizations.

I’ve tried to be as visible and as present as possible, not because of professional aspiration, but because I genuinely love doing what I do. I think that one of the key skills we learn as marketing professionals is good storytelling. It’s what I do for architecture firms, and it’s what I try to do through my newsletter, on social media, and through my advocacy work. 

With neighbourhood retail, it started when I learned about the Finch Store on Dewson Street. At the time, we were coming out of COVID and lockdowns, and I was feeling pretty bummed. I decided to do this project where I walk every street of the city and take pictures — I’d just bought some new photography equipment. Anyway, I was walking around near Ossington Station and I noticed this little shop with a petition in their window, regarding complaints to shut the place down. 

It’s a combination of a grocery store and cafe. What happened is that there was an anonymous complaint against the store in 2023, and then a municipal by-law officer deemed the store’s espresso machine — which drove a significant part of their revenue — illegal. We’ve had very strict by-laws regarding retail in residential neighbourhoods, and a lot of the historic corner stores on residential streets have disappeared. The Finch Store was not zoned for commercial purposes.  

So they had this paper petition in the window, for what I felt was a good cause. And I knew that it would resonate with the broader urbanist community online. Zoning and retail in neighbourhoods is something we talk about a lot in our world. Anyway, I got to know the owner, Yana Miriev, and I helped them get the petition online, and I talked about it on social media, which got a lot more attention. Pretty soon, it was all over the newspapers, and on radio and television. Last month, they finally got a new business license, allowing them to serve coffee. 

To some degree I served as a sort of conduit for that. I’ve spent 15 years building out an online audience and being loud on the internet. I was also becoming more interested in photography, which helped to document the whole thing. People are still surprised by it — especially architects. They look at this guy who has no credentials, no letters next to his name, and no non-profit behind him, and they think: How is he in a picture with the Mayor? The answer is really simple, I’ve just been doing this kind of stuff every day for 15 years. I’m not anybody special, I just keep showing up.