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April 19, 2012

TD Bank sues Live Lobster Co. for $3.4M

Three weeks after freezing Live Lobster Co.'s checking accounts, TD Bank has sued the Gouldsboro processor for $3.4 million. The bank says the company is not paying creditors and violating agreements with the bank.

Chelsea, Mass.-based Live Lobster Co., which operates in Maine as Lobster Web Co., halted lobster buying and processing when TD Bank froze its accounts on March 23. The bank filed a suit against the company April 12 in U.S. District Court in Boston, according to the Ellsworth American. The bank claims Live Lobster Co. President Antonio Bussone deposited some of the company's proceeds in an account at Century Bank and Trust "in an effort to conceal" them. It also violates an agreement the company made with TD Bank to deposit all receipts there. TD Bank also said the company is not honoring its obligation to creditors and has ceased operations. In 2008, the company put up all of its business assets in Maine and Massachusetts as collateral for a $4 million revolving line of credit with TD Bank, according to the paper.

Last year, Live Lobster bought the former Stinson Seafood cannery in the village of Prospect Harbor and has suffered cash-flow problems. Last November, checks to local fishermen bounced. Earlier this month, the company said it was trying to line up alternative financing with another lender in order to pay its 10 current employees and suppliers since its TD Bank accounts were frozen.

According to the Free Press, the company owes nearly $16,000 to the city of Rockland, where it owns Rockland Lobster Co., a lobster-buying and bait-selling operation. The company owes $7,580 for delinquent charges related to operating at the Rockland Municipal Fish Pier, and another $8,250 to continue operating there. If the company doesn't pay, the city will revoke its permission to operate on the pier and may seek legal action.

The company received a $200,000 grant and a $200,000 loan through the Community Development Block Grant program to renovate and buy equipment at the cannery. The Finance Authority of Maine also approved a $750,000 loan for the company, but that loan hasn't closed because Lobster Web never completed necessary paperwork.

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