American Seafoods, US government given until February 2024 to resolve settlement

An American Seafoods trawler.

A settlement between American Seafoods subsidiaries Kloosterboer International Forwarding (KIF) and Alaska Reefer Management (ARM) and the U.S. government regarding an alleged Jones Act violation must be resolved by February 2024, according to a court order.

U.S. District Court Judge Sharon L. Gleason has given the two sides until 5 February to file closing documents in the case, according to an order issued 9 January 2024.

“No additional stays will be granted in this matter absent a showing of exceptional circumstances beyond that date,” Gleason wrote in her ruling, referencing the six-month delay through which the settlement has already undergone.

A tentative agreement was signed between the parties in July 2023, with U.S. Customs and Border Protection (CBP) agreeing to eliminate nearly USD 400 million (EUR 359 million) in fines against KIF and ARM in exchange for a payment of USD 9.5 million (EUR 8.5 million) and an agreement the companies would cease using an intermodal facility in the Canadian province of New Brunswick, where it had built a short, dead-end railway CBP alleged was a “calculated and secret scheme” to avoid Jones Act rules.

In a 4 January filing, attorneys for CBP said they expected to finalize the agreement by the end of January 2024 but requested until 5 February to provide a status report to Gleason. The railway has since been dismantled, according to satellite imagery.

In their own filing 4 January, KIF and ARM blamed the government for the “inordinate and unreasonable delay” in finalizing the settlement. They said the lack of an agreement had caused “severe detrimental economic consequences” to their businesses.

“We are now at 170 days since the settlement was reached last July nearly six months ago. The government’s extraordinary delay, as Plaintiffs repeatedly have explained, has directly interfered with Plaintiffs’ corporate transactions, its finances, and its operations because Plaintiffs remain in corporate purgatory with no formal resolution of the enormous notices of penalty levied by the government in August 2021,” the subsidiaries said. “While we understand the government has its admittedly ‘bureaucratic’ requirements, the ongoing delay is inexcusable. As a litigant, the government has an obligation to our system of justice and to this court’s patience and indulgence to complete the negotiated resolution and not to leave targets of the government’s penalties publicly exposed to the uncertainty of enormous financial penalties.”

New York City-based private equity fund Bregal Investments announced in May 2023 it planned to divest from its Bregal Partners Fund I portfolio companies, which includes American Seafoods.

American Seafoods CEO Einar Gustaffson said the sale process continues to progress and that he considered the resolution of the settlement a formality.

"We consider the matter complete," Gustaffson told SeafoodSource. "[The] news is a formality, and we remain focused on our business."

Photo courtesy of American Seafoods


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