N.L. government sues Fleur de Lys seal operation over $1M loan

The Newfoundland and Labrador government says seal processor Phocalux International hasn't paid back a $1-million loan from 2015.  (Jonathan Hayward/Canadian Press - image credit)
The Newfoundland and Labrador government says seal processor Phocalux International hasn't paid back a $1-million loan from 2015. (Jonathan Hayward/Canadian Press - image credit)

The Newfoundland and Labrador government is suing a seal processor in Fleur de Lys, on the Baie Verte Peninsula, accusing it of not paying back a $1-million loan.

According to a statement of claim filed in mid-October, the provincial Department of Fisheries loaned Phocalux International Inc. the money in March 2015 to buy seals from harvesters.

The company produces seal fur, meat and oil, and a departmental press release from the time said the money was to help ensure income for sealers and processors.

In that release, Vaughn Granter, then minister of fisheries and aquaculture, said, "Phocalux International's entry into the seal processing sector is a testament to the commercial opportunities that exist and we are committed to helping this industry reach its full potential."

Similarly, Phocalux was touted in the 2015 throne speech as a reason to be optimistic for the future of the sealing industry.

At the time, Phocalux was a new company in the seal-processing sector with plans to capitalize on the Chinese market.

According to the statement of claim, Phocalux was supposed to begin repaying the loan, and the five per cent annual interest, in quarterly instalments starting in December 2015.

Payments would be based on 55 per cent of gross revenue generated through sales of inventory derived from purchasing activity from the 2015 harvesting season, say the documents.

The statement of claim alleges Phocalux "failed to make full payment, only applying partial payment to its first three payments on 6 January 2016, 4 March 2016 and 23 March 2016."

The court documents allege the loan has been in default since 2019.

The department claims it has continually asked for repayment but Phocalux has failed or neglected to make payments.

In the document, the department alleges "debt payment became a minimal fraction of the amount owed" in August 2020.

"Loan payments from the defendant have completely ceased as of February 2021," reads the statement of claim.

The department is suing the company for the $831,742 it says is outstanding on the loan, plus interest.

The company has not yet filed a statement of defence.

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