NEW GLASGOW – When Maritime Steel and Foundries Ltd. closed its doors on Christmas Eve, it may have been the final time.
The century-old New Glasgow foundry was forced into receivership Dec. 30 when its parent company called in a $17.75 million loan and the subsidiary couldn’t repay the loan.
Cameron Corp. Ltd. went before the Supreme Court in Halifax Thursday and filed bankruptcy papers against Maritime Steel. BDO Canada Ltd. was appointed as receiver for the facility.
The affidavit filed by Robert Cameron, president of Cameron Corp., shows that the plant is in serious financial trouble.
In addition to the $17.75 million to its parent company, Cameron Corp, Maritime Steel also owes money to four secured creditors: G.E. Canada Equipment Financing GP - $170,000; Nova Scotia Business Inc - $640,000; the Nova Scotia government, through the Rural Development department, $2 million; and an unnamed amount to National Leasing Group Inc. for leased equipment.
It’s believed that Maritime Steel also has a number of unsecured creditors. The amount they are owed is not specified.
Cameron’s affidavit also indicates that the facility is in arrears in its payments to Nova Scotia Power, which has been threatening to cut off power.
“If power is cut off, there is a real danger that, as a result of freezing, valuable equipment owned by Maritime will be permanently damaged.”
The plant was shut down on Christmas Eve, but there is hope for the plant. Cameron indicated in an affidavit that he has had "conversations with senior executives of three very substantial companies engaged in the same or related industries as Maritime who have expressed a serious interest in acquiring the assets of Maritime."
One potential buyer has already visited the site while others are expected to tour the facility in early January to "to commence carrying out their due diligence," the affidavit said.
“There are credible persons who have expressed an interest in purchasing all of the assets of Maritime and carrying on a business as a going concern,” the affidavit states. “It is believed that a sale to any of the potential purchasers will result in sufficient proceeds to satisfy the claims of all secured creditors, having a priority to Cameron. If a sale of Maritime’s assets as a going concern is achieved, it is reasonable to expect that a number of the jobs of persons employed by Maritime will be preserved.”
During the plant’s heyday, Maritime Steel employed as many as 170 people at full capacity, but the foundry has been operating with a crew of less than 60 for a few months now.
Earlier this month, Maritime Steel launched a lawsuit against its insurers, who paid only slightly more than one-tenth of the $3.8 million in damage claimed after a May fire in an outbuilding at the foundry where plans and moulds were stored.
Economical Mutual Insurance Co., Wawanesa Mutual Insurance Co., Lloyd’s Underwriters and Zive Insurance Ltd. are named in the suit.
"It is very unfortunate to lose a company with such a long standing presence in our region and I think first of those employees and the families impacted by the loss of jobs," said New Glasgow Mayor Barrie MacMillan in a prepared statement. "Maritime Steel has been a signature of Nova Scotia's industrial history for more than a century and for many, many years was a major employer in Pictou County.
"We hope and anticipate that there may be new opportunities for the future. The location of Maritime Steel along the revitalized New Glasgow riverfront is prime and there is great potential and many options for investors to explore."
