Great Northern Products has been booted out of Chapter 11 bankruptcy, a move that will likely result in the winding up of the company.
The Cranston, Rhode Island, U.S.A.-based seafood supplier filed for Chapter 11 bankruptcy protection in February 2024, but on 4 September, U.S. Bankruptcy Court Judge Diane Finkle granted a motion from U.S. Trustee Sandra Nichols asking for the dismissal of the case. Nichols had argued in a 22 August motion the company was not following its own reorganization plan, which had been amended in June.
“Cause exists to dismiss this case ... because the debtor is not continuing to prosecute its pending plan of reorganization or this Chapter 11 case, the value of debtor’s collateral is less than the claims of secured creditors, and the case is administratively insolvent while administrative costs continue to accrue as the debtor remains in Chapter 11,” Nichols wrote.
Great Northern will now face likely liquidation and dissolution.
In its June filing, Great Northern disclosed its secured creditors – Berkshire Bank and the U.S. Small Business Administration – were owed more than USD 730,000 (EUR 660,000), and that it had an unsecured debt of around USD 2.5 million (EUR 2.3 million) versus USD 1.5 million (EUR 1.3 million) in assets, according to Providence Business First.
Founded in 1988, Great Northern is an importer and exporter specializing in frozen crab, but also dealing in shrimp, lobster, scallops, groundfish, and salmon processed by partner plants in Canada, the United States, and South America. It is a supplier to domestic and international wholesale distributors, restaurant groups, supermarket chains, buying groups, and food producers.
In May, Great Northern Owner and CEO George A. Nolan said the firm ran into trouble amid a downturn in prices due to weaker demand, as well as supply issues caused by the Russia-Ukraine war. Fellow crab specialist Marine Fishing International, owned by Whittier Seafood, said it faced similar issues in its own Chapter 11 bankruptcy filing in August.
"It was a perfect storm," Nolan told Providence Business First.
In his recapitalization plan, Nolan said he would pursue the sale of company assets, including 175,000 pounds of seafood in cold storage. But Nichols said Great Northern has sold little of its inventory and has had practically no income, while it has continued to receive legal and cold storage bills and faces continued fees from financial advisors, as well as salary costs for its eight employees.
“Each week, the debtor continues to accrue expenses beyond its receipts,” Nichols said. “The debtor was administratively insolvent prior to the confirmation hearing. Based upon good faith information and belief, the amended plan as presented is not confirmable, and the debtor is no longer pursuing a liquidation in bankruptcy. At this juncture, the Debtor is negotiating with its secured creditors regarding the release of inventory and carve-outs for its professionals, all of which can and should be addressed outside of bankruptcy.”
Nichols said Great Northern has shown it has no alternative but liquidation.
“Since [Great Northern] does not intend to continue to pursue confirmation of the pending amended plan or to prosecute this Chapter 11 case, there is a substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation and cause exists to dismiss this case,” Nichols said.
