Bank to auction off Live Lobster properties

Posted Aug. 29, 2012, at 1:53 p.m.
Last modified Aug. 29, 2012, at 6:36 p.m.
This June 22, 2011, photo provided by the Live Lobster Company shows a billboard-sized aluminum fisherman standing outside what was the last full-time sardine cannery in the U.S. in Gouldsboro, Maine, now holding a lobster trap instead of a tin of sardines.
AP file photo
This June 22, 2011, photo provided by the Live Lobster Company shows a billboard-sized aluminum fisherman standing outside what was the last full-time sardine cannery in the U.S. in Gouldsboro, Maine, now holding a lobster trap instead of a tin of sardines.

GOULDSBORO, Maine — Though the company has been inactive for several months, Live Lobster’s presence in Maine seems poised to officially come to an end in about a month.

That’s when lender-ordered auctions will be held to find new buyers for three Live Lobster waterfront properties in Gouldsboro, Phippsburg and Stonington.

The properties are listed on the website of Tranzon LLC, a nationwide real estate auction company. Auctions for Live Lobster properties in Gouldsboro and Stonington will be held Wednesday, Sept. 26, and another auction for the company’s former buying station in Phippsburg will be held Thursday, Sept. 27, according to information posted on the auction firm’s website.

No one answered the phone at Live Lobster’s main office in Chelsea, Mass., when a call seeking comment was placed early Wednesday afternoon. Multiple attempts to contact Live Lobster officials in recent months have been unsuccessful.

This past April, Live Lobster’s primary lender, TD Bank, filed suit against the lobster distributor, claiming the firm violated terms of a 2008 loan agreement for $4 million from the bank.

According to federal court documents posted online, TD Bank voluntarily dismissed the lawsuit against Live Lobster last month. Attempts late Wednesday to contact the bank’s attorney for comment about the lawsuit’s dismissal were unsuccessful.

The lawsuit, and another filed against Live Lobster by a former company official and minority owner, are believed to be the primary reason Live Lobster suspended its operations in late March, when its checking accounts were frozen by TD Bank.

In its lawsuit, TD Bank claimed it loaned $4 million to Live Lobster in June 2008. As part of that loan agreement, Live Lobster promised the bank that it would have a “first-priority security interest in substantially all of its business assets … including without limitation, its inventory and accounts and the proceeds thereof,” according to the complaint.

TD Bank accused Live Lobster of failing to make loan payments and of depositing some of its proceeds with another bank, Century Bank and Trust Co. of Medford, Mass., which TD Bank claimed was a violation of the security agreement. TD Bank also claimed that Live Lobster still owed TD Bank $3,403,811.26 in principal and $4,413.93 in interest.

Alan Brown, Live Lobster’s former general manager, sued the company in February for allegedly failing to pay money it had promised him to resolve an earlier lawsuit he filed against the firm two years ago. Brown claims in his suit that he still is owed $235,702, plus interest, legal fees and other costs, of the $460,702 that the company promised to pay him after he sued them in 2010 for breach of contract and fiduciary duty. That case is still pending.

Late last year, Live Lobster drew the ire of lobstermen up and down the coast when it bounced checks it wrote as payment for their lobster.

At the time, Live Lobster President Antonio Bussone said “not that many” checks bounced and the company was having to adjust to new payment schedules associated with its new processing operations in Gouldsboro. Bussone said last December that the company had made good on the bounced checks and ironed out its cash flow problems with the bank.

Since this spring, company officials have kept mum about its financial situation, aside from blaming TD Bank for freezing its checking accounts.

Live Lobster, which has operated in Maine as Lobster Web Co., had buying stations in Phippsburg, Rockland, Spruce Head and Stonington. The buying stations in Rockland and Spruce Head did not involve any real estate, according to a person familiar with the firm’s operations in the state who did not want to be identified. The company’s operations in Rockland and Spruce Head consisted simply of Live Lobster-owned boats that tied up to local piers and bought lobster from local fishermen.

Live Lobster employed between 80 and 90 people at its distribution facilities in Maine and Massachusetts, not including its lobster processing facility in the Gouldsboro village of Prospect Harbor, which it purchased last year from Bumble Bee Foods.

Last summer, Live Lobster employed 70 people at the Gouldsboro plant, which operated seven days a week. The company, which had solely been a distributor until it bought the facility, spent months renovating the facility from a sardine cannery to a lobster processing plant.

The plant, located in the Gouldsboro village of Prospect Harbor, had operated as a sardine cannery from 1906 until two years ago, when Bumble Bee decided to close the facility and to shift its production to other canneries in New Brunswick, Canada. At the time of its closure in April 2010, the plant employed 128 people and was the last remaining sardine cannery in the United States.

Many in Gouldsboro and the surrounding communities put their hopes for keeping the plant functioning in Live Lobster. The company received federal Community Development Block Grant funding last fall, more than a year after it first sought the town’s approval for the funding. The company received $400,000 in CDBG funds to put toward the plant’s renovation and equipment costs.

Gouldsboro selectmen had balked at endorsing Live Lobster’s grant application, which the program requires, because it was concerned about intervening in the area’s competitive lobster dealer market. The company also was approved last year for a separate loan from the Finance Authority of Maine, but the company did not receive the $750,000 it was approved for. Officials at FAME have said that Live Lobster never completed and submitted the necessary paperwork to close on the loan.

Yvonne Wilkinson, Gouldsboro’s town manager, said Wednesday that the plant has played an important role in the area economy and many people are hopeful that it can again. A viable lobster processing facility not only would employ local people but would help diversify Maine’s lobster industry, which pumps hundreds of millions of dollars each year into the statewide economy.

“We’d love to see that,” Wilkinson said. “We just hope for the best.”

Follow BDN reporter Bill Trotter on Twitter at @billtrotter.

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