A funeral co-operative in Nova Scotia is going out of business, taking hundreds of thousands of dollars invested by its members with it.
About half of the 500 members of the Annapolis Valley Funeral Home Co-op will still have to pay for their own funerals after the property is sold to pay the co-op's debt.
The co-op, located in Coldbrook, N.S., said too few funerals and too big a discount for the first 300 members left the co-op insolvent.
Earl Lantz, chairman of the co-op board, said when the property is sold, members with prepaid funerals will get them and more than 200 others will get a discount.
"There will be no cash going back, there will be funeral arrangement value going back," he said.
Couple out $10K
Seniors like Bill and Loda Leenhout put $5,000 each into the co-op. The couple, aged 90 and 83 respectively, retired to Minas Basin 14 years ago and joined the funeral home to secure a dignified send off that wouldn’t be as expensive as a commercial funeral home.
They’re shareholders and had not pre-paid for their funerals. They won’t get any money back and they’re not satisfied with the promise of a 35 per cent discount with the home's planned new owner.
"If we have to go and pay another $5,000 [for a] funeral, I really don’t think that’s a good idea," Loda Leenhout said.
Lantz said the discount is the best-case scenario. Co-op members would have gotten nothing if the board rejected an offer to transfer the business and its debt to a man who owns four other commercial funeral homes in the valley.
"By the time we sold off at a fire sale, sold our building, our equipment and paid our bills, there wouldn’t have been anything left for our members," he said.
A majority of co-op members voted to dissolve the co-op at its annual meeting last April, but it could take another month before the deal is finally negotiated.
$180K operating debt
The nine-year-old Coldbrook funeral home never ran at a profit. It had two full-time staff, but not enough funerals. A financial statement showing its operating debt closing in on $180,000 deterred people from joining.
Lantz said the founders of the co-op gave the original members too good of a deal.
"The discounts and structure is what killed us. The initial 300 people got, in effect, a 30 per cent discount … and they got full credit for their shares toward their funerals," he said.
"People were so eager to get this co-op up and running that they gave the house away before they started business."
Tony Facey was hired to keep the co-op running last year. He owns several commercial funeral homes in the area.
"It was either hire Tony or close the doors. We had no operating capital we had lost our staff," Lantz said.
Facey later made an offer to buy the co-op property for essentially the cost of the debt and the discounts on funerals for members like the Leenhouts.
The Leenhouts say the proposal was unexpected. Copies of the plan weren’t available before the meeting and the vote was not recorded. Co-op policy requires only a show of hands.
Loda said she abstained because she was upset and unsure what was going to happen to their money.
The Leenhouts, meanwhile, have decided to donate their bodies to science.