Lawsuit: NFS owes millions to seafood exporters
Right before National Fish & Seafood announced it was closing its doors, two major seafood exporters said in a lawsuit that the now-defunct supplier owes them millions of dollars.
In a complaint filed last week in United States District Court in Boston, Massachusetts, Singapore-based Crustrade PTE LTD and PT Bumi Menara Interusa in Indonesia said that NFS failed to pay for “large quantities of fish it had contracted to purchase and receive."
The two exporters – along with a third supplier (Good Luck Product Co.) that worked with Crustrade – incurred damages of more than USD 5 million (EUR 4.5 million), according to the lawsuit.
Two days after the complaint was filed, the longtime Gloucester, Massachusetts, U.S.A.-based suppler abruptly announced it was ceasing operations.
“Unfortunately, despite great strides we made in improving operating performance, National Fish just had too many legacy issues that prevented us from consummating a sale,” NFS President Todd Provost said in a press release.
The exporters had no warning of the closure when they filed the lawsuit, according to Kurt Olson, the attorney for Crustrade and PT Bumi Menara Interusa.
"The closure came as a surprise to our clients. We are in the strategy stage," Olson told SeafoodSource.
According to the complaint, NFS issued several purchase orders to Crustrade for seafood worth more than USD 4.8 million (EUR 4.3 million) in 2017 and 2018.
“Relying on prior business practice and the specifics set forth in these numerous purchase orders, Crustrade performed the contracts by shipping the seafood that National Fish ordered to the locations that National Fish had designated,” Crustrade said in the complaint.
However, NFS “(a) failed to take possession of and pay for many of the shipments of seafood that Crustrade had completed under contract, and (b) took possession of, but failed to pay for, many other shipments of seafood that Crustrade had completed under contract,” the complaint stated.
In cases in which NFS failed to take possession of and pay for the agreed-upon shipments, Crustrade attempted to mitigate its damages by taking back possession of the shipments and reselling them to third-party vendees.
“In nearly all cases, when it was able to resell the seafood to cut losses, it was forced to do so at prices considerably lower than the original prices stated on the National Fish purchase orders. In addition, Crustrade suffered additional costs in mitigating its losses, including but not limited to demurrage costs (extra charges allotted when cargo sits in the terminal beyond the time originally designated),” the complaint said.
In November, 2018, Crustrade demanded NFS pay more than USD 1.3 million (EUR 1.2 million) owed, but NFS did not respond to the demand.
NFS should also pay more than USD 1 million (EUR 890,000) from Thailand-based seafood supplier Good Luck Product Co, Ltd., after it placed several orders with Good Luck that Crustrade fulfilled, the complaint said.
“It became the practice of Good Luck and National Fish that National Fish would order seafood products from Good Luck and that Good Luck would ship those orders to Crustrade, who would then arrange to deliver such shipments to National Fish after National Fish had paid for the product,” the complaint said.
In 2017 and 2018, Good Luck made 17 large shipments of seafood products to Crustrade, which was going to ship them to NFS.
“As a result of National Fish’s refusal to meet its payment and delivery obligations in regard to these 17 shipments, as well as in regard to other shipments Crustrade had accepted on behalf of National Fish, Good Luck incurred additional charges for freight, demurrage, bank charges, loss of business opportunity, and other damages,” the complaint stated.
BMI, a major processor and distributer of shrimp, crab and other fish products, also supplied around USD 280,000 (EUR 249,000) worth of seafood to NFS. NFS either did not accept the orders or did not pay for them, the complaint stated.