P.E.I. Preserve Company goes bankrupt
A well-known Island tourist operation has gone into bankruptcy, but a deal has been reached to keep the company in operation.
The P.E.I. Preserve Company, owned by Bruce McNaughton, went through major growth in 2004, expanding the New Glasgow restaurant, launching a five-hectare garden project, and investing in Great Northern Knitters. The $2 million in debt caught up with him over the winter.
"He made a big investment in the gardens and I don't think in the end that turned out to generate sufficient capital," Robert Powell of the bankruptcy firm AC Poirier and Associates told CBC News.
"They needed to invest heavily into a septic system to manage the high number of people that flowed through there.And he made an investment in Great Northern Knitters that was not successful."
McNaughton is well-known by Islanders, serving not only as the CEO but as the face of his business, greeting customers at the Café on the Clyde while wearing a kilt.
The company's creditors include the Business Development Bank of Canada, ACOA and PEI Business Development. The creditors did not agree to a restructuring, so technically the company went into bankruptcy late last week. But they didagree to sell the assets back to McNaughton in return for a cut of the profits over the next five years.
Powell said McNaughton will now focus on making preserves and running the Cafe on the Clyde restaurant.The gardens may be taken over by other interests.
It's not clear whether taxpayers will recoup their investments.