Nova Scotia Business, Inc sues lumber firm for $430,000

NSBI continued to loan money, even as Holdright Lumber failed to pay back earlier loans.

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Products Limited Limited, a Caledonia firm; according to the registry of joint stocks, the company's corporate status was revoked in 2008 for failure to pay fees.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.

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