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Captain John's restaurant, pictured here in 2012, is set to be towed from its slip at the foot of Yonge Street this week.Deborah Baic/The Globe and Mail

A prime parcel of marine real estate at the bottom of Canada's longest street may soon be up for grabs.

The iconic Captain John's, once a grand floating restaurant that eventually became a rusting "eyesore" to its Toronto waterfront neighbours, is expected to be towed away from its slip at the foot of Yonge Street as early as this week.

The ship was purchased in a court auction in July by James Sbrolla, an environmental tech entrepreneur, for $33,501. If all goes as planned, the ship will be moved from its slip to a space across the harbour by two tugboats on Friday, Mr. Sbrolla says. It will then be stripped of salvageable parts – the teak decks will be used by Toronto Brigantine on the tall ships they own; the scrap metal will be sold – and what remains will be demolished. The plan is pending as the sale of the ship must still be approved by federal court, though a court date has not been set.

The 90-metre cruise ship has been moored at the Yonge Street site since the 1970s, when owner John Letnik, a pioneer in developing Toronto's waterfront, brought it over from the former Yugoslavia. He invested $3-million in turning the five-level vessel into a restaurant and entertainment space that played host to everything from weddings, to bar mitzvahs, to christenings. Actor and comedian Bob Hope, former prime minister Brian Mulroney and ex-mayor Mel Lastman all dined on the boat. As Captain John's became a waterfront institution, the surrounding area also came to life with new condominium developments, office towers and art spaces.

But by 2002, the popularity of his business had sunk so deeply, Mr. Letnik sought bankruptcy protection. He tried and failed to sell his business in 2009. His debts mounted and in June, 2012, the city turned off the water service in an attempt to get Mr. Letnik to leave – an extreme measure that followed years of Mr. Letnik not paying realty taxes, fees and penalties. The Toronto Port Authority says Mr. Letnik owes them about $280,000. Mr. Letnik says he's on the hook for about $200,000 to Waterfront Toronto. And as of a year ago, Mr. Letnik owed the city $648,947.

Soon, if the courts approve the sale of the ship, a new occupant can move in to the wide slip Captain John's long occupied – though the Toronto Port Authority has not said whether the spot will be leased or sold, what price it will command or how a new tenant or owner will be found.

"We don't have a solid plan for what it will actually look like once that ship has been removed, because it has been a long process," said Erin Mikaluk, a spokesperson for the Toronto Port Authority. She said the reason the Port Authority has long pushed for the removal of the ship is because the public deserves access to that prime location on the waterfront.

Mr. Letnik plans to challenge the sale of the ship in court on the grounds that it was sold for much less than its true value.

"$33,000? It's like a tip to the waiter," he said. He estimates the scrap metal alone is worth $200,000. He also said Mr. Sbrolla received a multiweek extension on his payment for the boat, which the Port Authority should not have allowed. He'd like to see the agency offer a long-term lease of the slip, which he believes would attract a buyer, who would then restore it to its former glory.

Mr. Sbrolla hopes he'll get about $500,000 from the sale of scrap metal on the boat, which will mean he might only break even after he's paid for towing and the help of an environmental engineer, nautical engineer and ship surveyor.