TD Bank’s very bad year in the Maritime seafood business
A bankruptcy and insolvency court in Halifax granted Chester Basin Seafoods more time to restructure late last week in order to save its business exporting silver hake, a relative of cod.
The order approved a loan from the company founder to get two of its fishing boats out of a Meteghan shipyard where they are undergoing repairs.
Secured creditor Toronto-Dominion Bank reluctantly went along with reprieve. It was TD’s decision earlier this month to call in $5.5 million in loans that triggered the creditor protection proceedings.
Chester Basin is the third seafood company to falter in 2023 with TD Bank as a secured creditor on loans totalling $39 million.
The bank did not directly answer when CBC asked if it would pull back from the sector given this failure and others.
‘Where did all the money go’
“TD intends to continue providing access to financial services across our diverse customer base in all of the communities we serve,” spokesperson David Maher said in an email.
In Halifax on Friday, TD lawyer Gavin MacDonald asked bankruptcy and insolvency registrar Raffi Balmanoukian “where did all [Chester Basin’s] money go.”
“There is next to nothing in working capital and two busted vessels.”
MacDonald also said he was not “asserting anyone did anything wrong.”
Other companies on the rocks
In March, another Nova Scotia silver hake processor, Meridien Atlantic and Rocky Coast Seafoods of Comeauville, was forced into receivership when TD called $6.6 million in loans.
In September, the bank forced the sale of P.E.I. lobster processor South Shore Seafoods and affiliated companies. TD was owed $27 million.
Despite these localized setbacks, the seafood industry is by far the most successful sector of the Atlantic economy over the last decade, says fishery policy consultant and author Rick Williams.
He predicts that is not going to change.
Value of seafood on the rise
“I think we’ll continue to see a lot of investor interest in the fishery and we’ll continue to see at the enterprise level a lot of investor interest in having access to licenses and quotas,” Williams says.
Overall fishery landings fell by 20 per cent over the decade, but the value increased by 100 per cent largely because of shellfish, he said. Fishery exports from the region increased by 76 per cent.
“I would not generalize from a very small unique fishery like silver hake. I wouldn’t generalize from that to the overall fishering economy,” he said.
1 ship ran aground, 2 others failed
As for Chester Basin Seafoods and its silver hake business, the company has until Jan. 21 to right the ship.
Its financial problems grew this year when all three of its fishing boats were suddenly put out of commission.
Seaman’s Toy 1 ran aground and the other two experienced total engine failures. Fortune Pride and Atlantic Sea Clipper remain at the AF Theriault Shipyard.
In October, Chester Basin founder Jose Teixeira personally advanced $200,000 to make partial payment for repairs to Seaman’s Toy 1 so it would be released from the boatyard and the company would have one vessel out fishing.
Teixeira sold the company last year and is now a minority owner
He is lending the company $1.1 million at 18 per cent interest in what’s known as debtor in place, or DIP, financing to try to save the business. The financing was approved Friday by insolvency registrar Balmanoukian.
Teixeira declined comment after the hearing on Friday, as did TD’s lawyer.
