Creditors of Blue Harvest Fisheries are not expected to recoup much, if any, of the money owed to them by the New Bedford, Mass.-based Blue Harvest Fisheries, which filed for Chapter 7 bankruptcy protection on Sept. 8.
The company, which filed 40 separate Chapter 7 applications for its various subsidies, cumulatively listed more than 2,200 parties as creditors. The list includes fishermen who had worked for Blue Harvest, municipalities from Georgia to Maine, seafood companies such as Eastern Fisheries and Atlantic Capes, and hundreds of small- and medium-sized support businesses, including the companies' supply stores, shipyards, and mechanics.
But Blue Harvest and its subsidiaries have been stripped of most of their assets and very likely do not have enough to settle even a fraction of its debts. Cumulatively, Blue Harvest has listed between $100 million and $500 million in liabilities against assets valued at $50 million to $100 million.
“No property appears to be available to pay creditors,” the company wrote in a Sept. 13 notice to its creditors. “Creditors cannot demand repayment.”
New York City-based private equity firm Bregal Partners, which owns nearly 90 percent of Blue Harvest, sold off most of the company’s assets before the bankruptcy filing, including its processing facility for $20 million and its 15 scallop vessels for around $100 million.
Eileen Appelbaum, the co-director of the Center for Economic and Policy Research told The New Bedford Light those funds have been pocketed by the private equity firm and will not be available to repay the nearly 1,000 small businesses owed money by Blue Harvest.
“They buy a company, they strip it, they declare bankruptcy, and they walk away,” Appelbaum said, describing a common practice of private equity firms. “[Creditors] are left high and dry. That money is gone.”
Blue Harvest’s ownership of its groundfish permits, including up to 20 percent of permits for high-volume species along the U.S. East Coast, are included in the bankruptcy filings, but their value is not enough to cover the company’s total debt, given current market value of groundfish quotas.
A meeting between creditors and the judge appointed to hear the case is scheduled for mid-October. Thus far, the only company to file a legal claim against Blue Harvest for money owed is law firm Kelley Drye & Warren, a New York City-based law firm that provided legal services to Blue Harvest on “groundfish acquisitions” between March and September 2023, which claims to be owed $178,000, according to The Light.
New Bedford-based Reidar's Trawl Gear and Marine Supply, which is owed at least $10,000 will be damaged by the bankruptcy, according to owner Tor Bendiksen.
“If we don’t get what we are owed, it is going to be a big hit for our company,” Bendiksen told The Light. “I don’t know if we will ever fully recover from it.”
Crystal Ice Office Manager Mario Pereira said his New Bedford-based company is also owed money from Blue Harvest, but acknowledged it probably wouldn’t receive much, if any.
“It’s definitely going to be a hit,” Pereira said. “The whole waterfront will feel it.”
It’s not just the company’s creditors who are taking an economic hit from the bankruptcy; the company’s investors are also likely to be wiped out, according to Jeffrey Davis, who was the CEO of Blue Harvest between 2014 and 2018, and prior to that, helmed American Seafoods, Baader North America Corp, and BlueAqua Seafoods. He is now the founder and senior managing partner of International Seafood Partners (ISEA Partners), a global seafood industry investment consultation service.
“I was an investor and from what it sounds like I lost everything I put in,” Davis told SeafoodSource.
Davis poured more than money into Blue Harvest – he also staked some of his reputation on the company, helping to recruit Chris Lischewski, the former CEO of Bumble Bee Foods, and Jonathan Thorpe, former chief investment and strategy officer of the Central Bering Sea Fisherman’s Association, to sit on the company’s board. Amy Humphreys, the former president of Bristol Bay Seafood Investments and Icicle Seafoods; Inge Andreassen, the COO of American Seafoods; and American Seafoods CEO Einar Gustafsson also sat on the board and are owed compensation for that work, according to filings in the case.
Davis owns a 4.7 percent stake in Blue Harvest, which he said is now likely valueless.
“There is not much I can say about Blue Harvest,” he said. “Even though I had ownership in the company, Bregal did not share information about the status of the company with me. I as well as other U.S. owners learned about the problem only in the last week [before the filing].”
