A financially troubled housing co-op in Halifax is going into receivership, a judge decided Tuesday.

The North End United Housing Co-operative has owed contractors about $1.1 million for renovations that ran millions of dollars over budget two years ago.

The housing co-op only had $200,000 to pay them.

The co-op's total debt, including secured creditors such as the Halifax Regional Municipality, the Nova Scotia Housing Development Corporation and the CMHC, is more than $10 million.

Contractors fear the decision, made by Justice Glen McDougall, means they will never see their money.

'The right thing is to pay the contractors.'—Joe McLeod, plumber

McDougall approved appointing a receiver after a proposed arrangement between the contractors and the tenants fell through.

"Every effort possible has been expended" to reach a solution, he said.

The contractors were willing to accept just half of what they are owed. But that would mean the co-op would have to borrow hundreds of thousands of dollars, so its membership voted down the offer last week.

Joe McLeod, owner of Reliable Rooter Plumbing and Heating, says he's owed nearly $300,000. He told CBC News last month he's accumulated about $100,000 in debt because of it.

Paying wrong people

McLeod blames the provincial government, which holds the co-op's mortgages, for first signing off on the work and then paying lawyers and accountants instead of the contractors.

"They're going to get upwards of $600,000 plus, already to this day or more being spent on legal fees and nothing is shelled our way," McLeod said.

"They're worried about the wrong thing here. The right thing is to pay the contractors. If they had used some of that money to pay the contractors, this would be over with," he said.

Peter Smith, project manager at Eagle Project Management, agrees.

"It almost folded us twice. Besides us personally emptying our own bank accounts, taking lines of credit, maxing out credit cards, our lawyer bills being almost $25,000 — it's been devastating," Smith said.

The name of the receiver and the details of the arrangement will be worked out over the next few days.

The contractors say they have been waiting nearly two years to get paid.

With today's decision to appoint a receiver, they say the wait could be another couple of years or more of lawyers and court proceedings.