New Brunswick

Province seeks receiver for Industrial Rail

Via Rail has terminated the remainder of its $109-million contract with Moncton-based Industrial Rail Services to refurbish passenger cars.
Industrial Rail Services Inc. has a $109-million contract to refurbish 98 Via Rail cars. (CBC) (CBC)

Moncton-based Industrial Rail is facing new problems after Via Rail terminated the remainder of a $109-million contract and the provincial government is seeking a receiver for the company.

The New Brunswick government is seeking a court-appointed receiver for Industrial Rail Services, saying the company has failed to repay it loans, according to court documents.

The affidavit prepared by an employee with the Department of Economic Development, describes the "deteriorating" relationship between Via Rail and Industrial Rail.

The provincial government said in the court documents it wants to go ahead with receivership "for the benefit of all interested parties."

Industrial Rail fell behind on the $109-million project to refurbish 98 train cars, saying it was trying to work around problems that engineers found in the cars' framing.

According to the affidavit, Via Rail terminated the uncompleted portion of its contract on April 11.

The provincial government has said it backed the company with $22.5 million in loans and guarantees.

The province filed an affidavit with the Court of Queen's Bench on Monday. 

Via Rail said it could not "offer any further comment at this time, given the ongoing legal proceedings."

Industrial Rail could not be reached for comment.

The parties will appear in court in Fredericton on Thursday at 1:30 p.m.

Industrial Rail laid off 85 people in March.

"It's certainly never good news, especially on the job loss side," said Denis Melanson, director of business development with Enterprise Greater Moncton.

"Your heart goes out to the people that are affected by job loss. But our agency's here to support that company and the employees through career transition and get them back into the workforce."

The Moncton company is a full-service locomotive and passenger railcar facility specializing in equipment repairs, remanufacturing, modifications, and refurbishment.