Elverta, California, U.S.A.-based Sterling Caviar entered receivership in April 2024, with creditors claiming the company owes them more than USD 23 million (EUR 21.5 million).
Numerous lawsuits involving the company dating back to 2020 reveal significant financial issues plagued it for years, and may continue to complicate its existence as its ownership pursues a path forward.
In 2020, Ken Beer, the owner of Galt Fish Farm, who does business as The Fishery Inc., was sued after attempting to sever his contract to raise some of the sturgeon used by Stolt Sea Farm, which founded Sterling Caviar in 1983. Beer said in a declaration submitted as part of the lawsuit Sterling Caviar shuffled through six different presidents or general managers in six years leading up to February 2019, according to the Sacramento Business Journal.
“Sterling struggled to identify and execute a coherent business plan,” Beer said in a declaration submitted as part of the lawsuit. “Sterling's revolving door at management meant that Sterling lost a lot of its institutional knowledge, and we at The Fishery had to put a lot of time and patience into attempting to maintain our good historical relationship.”
Beer and Stolt Sea Farm did not respond to requests for comment from the Business Journal. The Fishery ultimately sided with Beer in the dispute, and The Fishery was able to terminate its growing contract with Sterling Caviar, which had been in place since the 1980s. Beer said he pursued an exit due to operational dysfunction at the company, including rapid changes in business plans leading to the culling of sturgeon before they were mature enough to be harvested for caviar. Beer said he had also heard Sterling Caviar was being sold by parent company Stolt-Nielsen to Hyde Road Agricultural Associates, owned by New York real estate entrepreneur Eugene Fernandez. That deal closed in October 2020 at a price of USD 6.2 million (then EUR 5.8 million).
Fernandez sought to combine Sterling’s operations with those at Lazy Q Fish Ranch – a 160-acre fish farm in Dixon, California, which he had owned since 2014 – under the umbrella of Hyde Caviar LLC. The deal was made possible through a USD 14 million (then EUR 12.9 million) loan Hyde Road Agricultural Associates received from CapitalView Investment Partners and Hunter Street Partners. Sterling Caviar had been loss-making for Stolt Sea Farm, and the onset of the Covid pandemic exacerbated the financial problems besetting the firm. Fernandez told SeafoodSource at the time of the takeover he was confident he could turn around Sterling’s financial picture.
“It was managed successfully for many years, but in the last five years, they just mismanaged it,” he said. “With a new team, new employees, and guidance from outside people in the industry, we can take it back to its position as the number-one caviar producer in the United States.”
However after the purchase Cintas Corp, a uniform and janitorial supply vendor, sued both Stolt Sea Farm and Hyde Caviar in 2021, alleging it was owed USD 112,000 (EUR 104,000) in unpaid invoices and early contract termination penalties. In the suit, Stolt argued it had passed the contract to Hyde Caviar, but Hyde Caviar said it had not agreed to take over the Cintas contract. A tentative settlement agreement has been delayed due to Hyde Caviar’s receivership.
Stolt Sea Farm and Hyde Caviar have also sued each other.
Stolt claims it is still owed USD 1.2 million (EUR 1.1 million) from the sale of Sterling Caviar, as well as USD 87,200 (EUR 81,000) in prorated property and business taxes and prepayments for aquafeed it incurred before the sale closed.
Hyde Caviar claims Stolt misrepresented the value of Sterling Caviar during the sale process, failing to disclose a bacterial infection impacting its operation that resulted in more than USD 300,000 (EUR 280,000) in direct costs, and not handing over company information, including certain files and access to email account histories.
“The transition period after the closing was extremely disorganized and chaotic due to Stolt’s conduct,” Hyde said in its suit.
Hyde also accused previous Sterling Caviar President David Shenson of changing the company’s sales strategy in a manner that maximized short-term profits by switching to sell its freshest product first, rather than selling product in the chronological order in which it was produced. Shenson also locked the company into lower promotional pricing deals and made large sales to customers that typically bought smaller amounts of product at monthly intervals.
"[Shenson] made every attempt possible to torpedo Hyde’s chances at success post-closing, and was successful in that venture,” Hyde Caviar said in its complaint.
Shenson did not respond to a request for comment, and Hyde did not state how much Stolt Sea Farm’s alleged misconduct cost it in its filings, according to the Sacramento Business Journal.
Additionally, Hyde Caviar was sued by Juan Johnson, a former processing supervisor at Sterling Caviar, for breach of contract in July 2023. Johnson, as 12-year employee of the company, left it in July 2022. Settlement discussions took place in December 2023 but the case remains active.
Fernandez and Sterling Caviar CEO Jeff Sedacca did not respond to requests from SeafoodSource for comment. Sedacca previously told SeafoodSource the company had around USD 30 million (EUR 28 million) in sales in 2021 and was looking to expand.
Fernandez previously ran into trouble in New York state when his company was fined USD 1.3 million (EUR 1.2 million) for moving 200,000 yards of sand and gravel without a permit in 2019. The firm, BlueGreen Farms, was seeking to build a fish farm to raise sturgeon and striped bass on a 67-acre property in Yaphank, New York, according to Newsday.
