RELATED PARTY DEBT

3 Months Ended

Jul. 31, 2011

RELATED PARTY DEBT [Text Block]

7. RELATED PARTY DEBT

    The Company’s mortgage notes (originally issued in 1998) are due May 15, 2015 and are held entirely by the Company’s Chief Executive Officer. These notes carry interest at the rate of ten percent per annum. These notes, among other things, prohibit Canal from becoming an investment company as defined by the Investment Company Act of 1940; require Canal to maintain minimum net worth; restricts Canal’s ability to pay cash dividends or repurchase stock and require principal prepayments to be made only out of the proceeds from the sale of certain assets. As of July 31, 2011, the balance due under these notes was 847,000, all of which is classified as long-term debt-related party. Canal has incurred interest expense on these notes of approximately $64,000 and $88,000 for the nine month periods ended July 31, 2011 and 2010, respectively.

    At July 31, 2011, substantially all of Canal's real properties, the stock of certain subsidiaries, the investments and a substantial portion of its art inventories are pledged as collateral for the following obligations:

		July 31,		October 31,
($ 000's Omitted)		2011		2010
Variable rate mortgage notes due    May 15, 2015 - related party	$	847	$	847
Less -- current maturities		0		0
Long-term debt	$	847	$	847

    The Company has a line of credit with HNB Bank in the amount of $250,000. This credit line is used in the Company’s Saint Joseph stockyard order buying operation. The outstanding balances on this line of credit are secured by either the livestock purchased on order or the associated receivable for the livestock that has been delivered to the purchaser.

    The outstanding balances on this credit line were $0 and $154,000 at July 31, 2011 and October 31, 2010, respectively.