Pacific Andes, China Fishery sue HSBC for USD 22.6 million

Published on
July 2, 2018

Editor's note: This story has been amended to reflect the fact that Pacific Andes has not declared bankruptcy, but rather filed for Chapter 11 bankruptcy protection in the United States. 

In a lawsuit filed 29 June, the Pacific Andes Group and several of its subsidiaries, including the China Fishery Group, have sued their former lender, the Hong Kong and Shanghai Banking Corporation (HSBC) for more than USD 22.6 million (EUR 19.5 million), alleging HSBC forced the seafood giant to make so-called “avoidable transfers” that directly contributed to its ffinsolvency.

Hong Kong–based Pacific Andes filed for Chapter 11 bankruptcy in July 2016, after the company’s creditors, including HSBC and Bank of America, pushed a claim on the company’s assets, alleging they were owed hundreds of millions of dollars. 

Pacific Andes’ lawsuit alleges that between 2014 and 2016, HSBC required numerous avoidable transfers that included the transfer of property, that “were not on account of an antecedent debt or prepayments for goods and/or services subsequently received.” 

Pacific Andes did not receive “reasonably equivalent value” in exchange for the avoidable transfers, the company said in its suit. As a result, the company was left undercapitalized and eventually become insolvent, Pacific Andes said.

The lawsuit calls for the return of all assets Pacific Andes has identified as being involved in the avoidable transfers between 30 June, 2014 and 30 June, 2016. In the suit, Pacific Andes requested the right to amend its filing to add further claims of damages, including the addition of parties other than HSBC, to the lawsuit as more discovery is made in the case.

Pacific Andes Chapter 11 reorganization is ongoing. A court-appointed trustee, William Brandt of Development Specialists, Inc. (DSI), has been granted the ability to issue subpoenas to HSBC by the judge overseeing the case, which is being heard in the U.S. Bankruptcy Court in the Southern District of New York. Brandt is investigating HSBC for aggressive collection tactics that he said had a "severely negative impact" on the fishing enterprise.

Simultaneously, Brandt is pursuing a sale of many of Pacific Andes assets, including its holdings in the Peruvian anchoveta and fishmeal sector, with the goal of recouping funds to cover the firm’s netted debt.

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