Chile’s Supreme Court has ordered salmon-farming firm Nova Austral to go back to the books and come up with a new proposal for its financial reorganization.
Upon reviewing the resolutions of the Court of Porvenir and the Court of Punta Arenas, the highest court, in a 26 September ruling, struck down a previous order to liquidate the company, but confirmed that the reorganization agreement – approved in January 2024 – contained illegal stipulations regarding unequal treatment between secured creditors of equal status.
The salmon firm has 10 days to present a new proposal from the date of the Supreme Court ruling.
Having been plagued with legal, environmental, and production issues leading to financial troubles, Nova Austral began its reorganization process in 2023. At the beginning of 2024, the company’s creditors overwhelmingly approved its judicial reorganization agreement to restructure debt of nearly CLP 450 billion (USD 466 million, EUR 397 million).
In May 2024, the Porvenir court ordered the initiation of the debtor company’s bankruptcy liquidation process, but the Punta Arenas Court then revoked this decision in August 2024. At that point, two creditors – Comercializadora Nutreco and Compañía Salmonífera Dalcahue – appealed the case to the Supreme Court.
Dalcahue based its challenge on an alleged agreement between one or more creditors and the debtor to obtain undue advantages, while Nutreco questioned the move on similar grounds, as well as on alleged clauses that went against Chilean law. The Supreme Court rejected the appeal filed by Dalcahue and partially accepted the appeal filed by Nutreco, on the grounds that there was unequal and unjustified treatment when compared to another creditor food supplier – Cargill.
“The stipulations contained in the [restructuring] agreement relating to the differential treatment between creditors that are in the same credit status exceed the [legal] limit … and produce an unfounded inequality, which constitutes a violation of the essence of the pars condicio creditorum principle,” the Supreme Court ruling said.
Under that principle in bankruptcy proceedings, creditors with equal status and with the same nature of credit should receive the same treatment in the recovery of their credit.
As such, the company is now obliged to reformulate its reorganization agreement, adjusting it to the criteria of equality, proportionality, and reasonableness set by the court.
In a statement sent to SeafoodSource, Nova Austral said it will negotiate with the affected creditors, looking to adjust conditions as required by the judicial branch.
“Nova Austral reaffirms its commitment to provide operational continuity, safeguard employment, and move towards a sustainable restructuring with broad support from its creditors,” it said.
An industry insider with knowledge of Nova Austral’s situation told SeafoodSource that the ruling is overall a positive development for the firm.
“The company’s liquidation has been ruled out, and it also has been ruled out that there was collusion between creditors. The company has to present its proposal soon – a proposal for which it already has the votes of the guaranteed creditors, of the bondholders, and therefore there is very little risk,” the source said. “The [upcoming] proposal will incorporate an upgrade of the conditions to Nutreco as a creditor, which was alleging that their conditions that were not comparable to those of others such as Cargill, and that is going to be corrected.”
The industry source told SeafoodSource that Nova Austral’s situation in 2025 has changed dramatically from when it first pushed for reorganization.
“It has cash flow and a healthy amount of biomass, with about 20,000 metric tons of annual production planned over the next two years to supply large formats in the U.S.A. and Canada,” the source said.
Nova Austal’s reorganization effort aims to ensure operational continuity for the firm, which has faced numerous fines and executive shake-ups from the Chilean government for environmental infractions.
Nova Austral came under investigation in 2019 from Chile’s National Fisheries and Aquaculture Service (Sernapesca) for underreporting mortalities – an infraction which led to criminal charges and fines. Subsequently, it found itself in regulatory hot water and financial straits for several years.
In April 2024, a Chilean court of appeals confirmed the salmon farmer must pay a fine of CLP 1.02 billion (USD 1.06 million, EUR 992,000) for other environmental infractions.
The three largest creditors of Nova Austral are Nordic Trustee, which has reportedly invested USD 415 million (EUR 389 million) in the company, followed by DNB Bank at USD 69 million (EUR 64.7 million), and Skretting at USD 23 million (EUR 21.6 million).
In July this year, a criminal court in Punta Arenas sentenced several former Nova Austral executives for environmental crimes, with penalties including fines and jail time. Besides the falsification of mortality reports, the company had reportedly stocked salmon beyond legal limits and the now-convicted individuals introduced sand and chemicals into the waters at the company’s salmon farms located in Alberto de Agostini National Park to cover up the pollution caused by that overproduction. The executives were charged for the repeated crime of water pollution between December 2016 and June 2019.
Following the events under investigation in the case, Nova Austral completely restructured its executive staff and sought to strengthen its internal practices and controls.
The firm also underwent a change of ownership in September 2024 following its judicial reorganization, whereby the Larta Investment Group took over as sole owner. As such, the company has a different management team, new shareholders, and a different board of directors than those in place at the time of the events outlined in the case.
