PICTOU – The troubled Pictou Lodge Beachfront Resort is being sued by the Royal Bank of Canada for over $4 million.
The bank is owed for monies loaned to the Lodge for general operations and the construction of five condominiums.
“There was no consensus on injecting more funds into the Lodge from the shareholders,” said Calvin Wadden, President of Pictou Lodge.
“This is a valuable business with a great staff, but with the hurdles we’ve faced in the past two years, the working capital has just dried up.”
Over the last several years, under new ownership, the resort has gone though several major upgrades but experienced a fire in June of 2011 in the kitchen that resulted in smoke damage throughout the lodge.
The business was never able to recover from the negative working capital shortage created from the fire, said Wadden, in addition to substantial cost overruns from the rebuild, challenges with adequate insurance coverage and delays in completing renovations in time for the start of the 2012.
He now says it’s up to Grant Thornton LLP, RBC’s choice for manager and receiver of the Lodge to put together a sales package to try an find a suitable buyer.
“[The receiver] will try and get the most for the bank, then the secured share holders and finally the unsecured share holders,” said Wadden.
“Once everything is said and done, I fear that it’s not going to be so good some of the shareholders because there may not be money available ”
Still, there is reason for optimism
“The bookings right now that we have on the books are 30 per cent higher than last year at this time,” Surrett said. “It’s probably one of the best forecasted years. We have a record number of weddings right now.”
The resort, originally built in 1926 and once owned by CN Rail, will continue in the interim to accept bookings in the anticipation of finding a new owner for the 2013 season, according to a release. The seasonal resort employs between 60 and 70 full-time and part-time staff during full operations.
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