Shrimp-farming firm NaturalShrimp is facing the potential liquidation of its assets after a court-appointed receiver determined it to be the best way to secure assets of lenders.
NaturalShrimp revealed in a Form 8-K filed with the U.S. Securities and Exchange Commission on 13 September 2024 that Streeterville Capital LLC and Bucktown Capital LLC both filed motions to appoint a receiver to the company alleging NaturalShrimp defaulted on its loan agreements. The motion, filed 3 September 2024, was quickly granted on 9 September by a district court in the U.S. state of Utah.
Turnaround and Restructuring LLC was put in charge of reviewing NaturalShrimp Inc., NaturalShrimp USA Corporation, NaturalShrimp Global Inc., and Natural Aquatic Systems, Inc. to determine the best path forward for creditors.
Soon after the court and SEC filings, NaturalShrimp put out a press release stating it “entered into discussions with Streeterville Capital” to resolve current issues and “to continue growing and expanding the production of the company’s sushi grade shrimp.”
“Rather than shutting down its operations in response to the litigation or seeking protection under U.S. Bankruptcy Laws, [NaturalShrimp CEO] Gerald Easterling stated that a better alternative is to continue seeking an amenable solution with Streeterville,” NaturalShrimp said.
The company has been quiet about the ongoing process since the release, and the latest motion filed by the receiver on 13 February reveals it found the best option for creditors is to sell off NaturalShrimp’s assets.
“Receiver has concluded that the only viable path forward to preserve the assets and satisfy as much of the Receivership Entities’ outstanding debt obligations is for receiver to sell the assets to the highest bidder,” the court filing states. “With this motion, receiver proposes to sell substantially all of the Receivership Entities’ assets.”
According to the court filing, during its investigations, Turnaround and Restructuring found the company’s sales are not enough to cover its expenses, and even when expenses are cut to a bare minimum needed to operate, NaturalShrimp would still suffer a loss of USD 165,000 (EUR 157,000) each month.
The receiver investigated whether debt financing, investments, strategic transactions, reorganizations, or other options could keep the company afloat – but determined the continued losses “with no immediate solution” means none of those options are on the table.
“The Receivership Entities also lack capital to sustain operations for any period of time from any source other than lenders, and lenders are under no obligation to continue funding losses,” the court filing states.
The filing also said the lenders are willing to act as a stalking horse bidder in the event the court grants the motion to sell off assets. Those assets include the company’s property in Texas and its three facilities in Iowa, which are located in Webster City, Blairsburg, and Radcliffe.
According to the receiver, the four properties are worth a combined USD 9.875 million (EUR 8.456 million), and its most valuable property is its Webster City, Iowa, facility, which is worth roughly USD 7 million (EUR 6.7 million).
The company also has roughly USD 112,000 (EUR 107,000) in vehicles, USD 1.25 million (EUR 1.19 million) in other personal property, and USD 5.7 million (EUR 5.4 million) in intellectual property – meaning all told the company’s assets are valued at just under USD 17 million (EUR 16 million).
Meanwhile, the filing indicates the company has USD 33.8 million (EUR 32.3 million) in secured debt, and the receiver said the sale is the best option for eliminating the debt and providing for the continued operation of the business.
“In its business judgment, receiver believes the proposed sale is in the best interest of the Receivership Entities, creditors, and other parties in interest because it allows receiver to preserve the rapidly declining assets and liquidate the same to the highest bidder,” the filing states.
Over the course of the past year, NaturalShrimp’s stock price has reflected its increasingly difficult financial situation. As of 18 February, the company’s stock price hovered around USD 0.0003 (EUR .00027) per share according to Yahoo! Finance, OTC Markets, and MarketWatch.
At one point, NaturalShrimp announced plans to expand in Florida and Puerto Rico and had signed distribution agreements with US Foods and Gulf Seafood Inc. The company also signed a joint venture with Ecoponex, in 2020, and the company purchased the former assets of VeroBlue for USD 10 million (EUR 9.5 million) in August 2020.
However over the past five years, the company has faced several challenges – including a fire at its La Coste, Texas-based facility in 2020, followed by a second fire at the same facility in 2022.
The first signs of potential financial trouble came when NaturalShrimp pursued a merger with Yotta Acquisition Group in October 2022. That merger was called off in July 2023 after financial documents, as well as the terms of the merger agreement, revealed NaturalShrimp did not have net tangible assets of at least USD 5 million (EUR 4.7 million) but, instead, had liabilities of nearly USD 21.2 million (EUR 20.3 million).
