Correction: In a previous version of this story, SeafoodSource erroneously reported that a ruling had been issued in favor of admitting National Fish and Seafood's request. In fact, no decision has been made on NFS' application as yet and no order has been signed.
National Fish and Seafood is demanding more than USD 30 million (EUR 26.3 million) in repayment from its parent company, according to new court documents filed this month in the Pacific Andes bankruptcy case.
Hong Kong-based conglomerate Pacific Andes, which filed for Chapter 11 bankruptcy in 2016, is the majority owner of Gloucester, Massachusetts, U.S.A.-based National Fish and Seafood (NFS).
According to a request for repayment filed in the case by NFS President Todd Provost, Pacific Andes, via company secretary “Dennis” Chan Tak Hei, transferred funds from a bank account which included a debt facility controlled by Pacific Andes.
As a result, Pacific Andes was “able to shore up their own liquidity by utilizing cash proceeds of NFS’ accounts receivable and by causing NFS Ltd. to draw on its debt facility and transfer funds to the[m],” Provost wrote in his complaint.
Pacific Andes also sometimes required NFS to pay U.S. brokers in connection with seafood-related financial transactions the parent company made within the United States. These cash advances were booked as intercompany loans, for which NFS charged Pacific Andes four percent interest. The money owed reached a high of more than USD 42.9 million (EUR 37.6 million) by September 2015, though Pacific Andes repaid more than USD 10.6 million (EUR 9.3 million) that year. Additionally, Pacific Andes allowed NFS to purchase more than USD 3 million (EUR 2.6 million) in seafood from its affiliates using the loan balance, leaving a remaining balance of more than USD 30.1 million (EUR 26.4 million).
Provost initiated the filing to make a special claim to the owed money, as the normal filing window for claims for debts owed passed in 2017. In his filing, Provost said Pacific Andes did not contact any representatives of NFS to inform them of the filing date, and in addition, NFS filed a disputed claim in court against NFS for USD 29.1 million (EUR 25.5 million)
“[Pacific Andes’] behavior is all the more egregious considering that the same individuals whose actions most likely gave rise to the claims were ultimately responsible for the notice provided,” Provost wrote.
In a previous, related ruling, U.S. Bankruptcy Judge James Garrity, who is overseeing the case, ordered NFS to begin efforts to manage its own sale. That process remains ongoing, though at least one company – Vernon, California, U.S.A.-based Red Chamber – made overtures to buy NFS in 2017, entering into a confidentiality agreement with NFS “in relation to Red Chamber’s interest in evaluating NFS’ business,” according to a separate court filing.
