Nova Scotia Business, Inc appears to have thrown good money after bad, compounding one bad loan with a second, and then a third. Now, the province’s economic development arm is out $430,000.
Friday, the provincial department of Justice filed suit in the Supreme Court on behalf of NSBI and naming Carolyn Anne Holdright and Neily Roy Holdright as defendants. The Holdrights were directors of Holdright Lumber Products Limited Limited, a Caledonia firm; according to the registry of joint stocks, the company’s corporate status was revoked in 2008 for failure to pay fees.
NSBI’s lawsuit alleges that in April of 2006, NSBI loaned Holdright Lumber $430,000, and that in December, 2006, Carolyn and Neily Holdright Guarantee Agreement as security the full amount of the loan, plus interest accrued from the date of demand for payment. Subsequently, says the suit, Holdright Lumber defaulted on the loan, and the Holdrights defaulted on the Guarantee Agreement.
The suit seeks full payment of the $430,000 loan, plus interest. The allegations contained in the suit have not been proven in court.
The forest products industry is a tough one even in the best of times, but Holdright Lumber made a go of it for many years, thanks in some measure to government assistance. ACOA records show that the federal agency loaned Holdbright Lumber $151,928 in 1998 so the company could buy and install a dry kiln system, and then another $64,750 in 2002 to “acquire value-added processing capabilities.”
I called NSBI spokesperson Cindy Roberts twice today to ask for more information about the $430,000 default; she finally responded via email as follows:
Below is a summary of NSBI’s financial transactions, (including an authorization from NSBI’s predecessor) with Holdright Lumber.
· Sept. 1998— $65,500
· Feb. 2003—$189,000
· Mar. 2006—$150,000
Please Note: When NSBI invested $150,000 of new money in March of 2006 it brought the approval amount to $430,000.
Those figures suggest that no substantial repayment was made on the first two loans before the third loan was made, and that interest owed on the first two loans was rolled into the third.
“There was some capitalized interest rolled in to the outstanding balance,” explains Roberts in a second email. “The company had suffered a fire loss prior to the 2006 loan and we were working with them to get it back into a fully operational state.”
I called the Holdright home for comment, but there was no answer.
Editor’s note: the headline on this article originally identified Hardright Lumber as a Cape Breton firm. There is a neighbourhood outside Glace Bay called Caledonia, but the Caledonia in this case is a town in Queen’s County. We regret the error.
This article appears in Feb 23-29, 2012.
NSBI? given the recent Ship building promo untendered contract issue I really question the value of these clowns
To me, this doesn’t immediately look bad on NSBI. I mean, as an institution loaning money if you put out enough loans eventually one of them will default. You just hope that NSBI doesn’t make a habbit of it.
This is great news, it just goes to show the big boys from outside of the constipated province that we are a soft touch for a sad story. I must try this scam with my bank I only owe them a couple hundred thousand on my summer place down Chester way, it needs a few things to be spruced up like my sauna, and tennis court . Maybe I could invite some of the NSBI movers and shakers down for a weekend for some wine sipping and grass puffing, they if anyone would know how to scam money and get away with it. I will be able to ask them about the addition to the premiers cottage at the same time. I hear that they are underwriting it as well. Great to have friends in the right places eh? Reminds me of John Hamm and his buddy with the magic village up in Pictou County. It was only a few years ago he magically made a half million disappear as well, I hope they enjoyed their winter cruise, their employees are still waiting for their back pay.
The company employed 20 people in a rural area without much employment for 10 years. There payroll would at least equal this loan size every year. That money goes back into the economy. The biggest benefactors were the community and the local economy. Everyone seems to forget what a contibution this business made. It was a good investment for NSBI. The economy was repaid that much every year for ten years. When the company was down due to fires, the employees got employment insurance.
The owners got stress and more work to rebuild. Twice. Now they may lose everything else they have worked for. They didn’t scam anything or live like rich people. They supplied jobs and scraped by until it wasn’t feasible anymore. They lost their big US client due to politics because Canada didn’t go to Iraq. Political bullshit was a big factor.
The big picture should be considered. The owners and NSBI have caused employment for 20 people for ten years and $4 – $5,000,000 – ($430,000 for a bad loan) to be rotated through the economy. That money went to the grocery stores, clothing, cars, everything families buy……….it’s what keeps the economy going. Certainly nothing to be ashamed about on the part of the loan officers or the owners of the mill. Good job Holdrights! Good luck in the suit.
S. Baxter