Elverta, California, U.S.A.-based Sterling Caviar has entered receivership, with creditors claiming the company owes them more than USD 23 million (EUR 21.5 million).
The company, which was purchased by Eugene Fernandez in October 2020 for USD 6.2 million (EUR 5.8 million) from Stolt-Nielsen via his holding company Hyde Road Agricultural Associates, received a USD 14 million (EUR 12.9 million) loan from CapitalView Investment Partners and Hunter Street Partners to expand its caviar operations at the former Lazy Q Fish Ranch in Dixon, California, U.S.A., in April 2020.
Fernandez told SeafoodSource at the time he wanted to significantly ramp up production and distribution of U.S.-sourced caviar in the domestic market and that the purchase of one of the oldest and largest caviar producers in the U.S. would accelerate that effort.
However, court documents show CapitalView and Hunter requested Sterling be placed into receivership in January 2024 and that a judge in Solano County, California, granted that request soon after, according to the Sacramento Business Journal. The two private equity firms claim Hyde Road ceased making debt payments in early 2023 and that they had concerns Sterling’s sturgeon – valued at USD 24 million (EUR 22.5 million) – were not being properly cared for.
“Ongoing financial issues have left the fish not having sufficient feed or aeration, meaning their survival is in jeopardy,” the creditors claimed in court documents, which stated the sturgeon had gone up to two weeks without being fed.
In a response to the filing, Fernandez disputed the allegation regarding mistreatment of its fish.
“I would never permit the company to do anything to harm the fish or any other assets of the company,” Fernandez wrote. “I would only be harming myself.”
The creditors wrote they had had “significant concerns about certain transfers made by the defendants and unexplained discrepancies in the financial reporting provided by the Hyde Road Entities.”
Fernandez unsuccessfully opposed the move to place Sterling into receivership, arguing Hyde Road had repaid USD 6.4 million (EUR 6 million) thus far and that Sterling’s inventory and other assets covered the remainder of the outstanding balance.
A separate creditor, Sachem Capital Corp., filed a notice of default against Sterling for USD 3.15 million (EUR 2.95 million), with the company’s 26-acre headquarters and processing facility in Elverta listed as collateral. Sachem has postponed a foreclosure action while it works with Sterling to resolve the dispute.
On 29 April, the appointed receiver requested additional funds to cover expenses, including a USD 95,000 (EUR 90,000) utility bill from Pacific Gas & Electric Co., which threatened to shut off the farm’s electricity if it did not receive payment promptly. The creditors agreed to loan Sterling another USD 500,000 (EUR 468,000) to cover operating costs to ensure the farm remained operational.
In court filings, Sterling, which operates farms in Elverta, Wilton, Sacramento, Ione, and Dixon, California, listed its assets as USD 111,000 (EUR 103,000) in cash on hand and USD 965,000 (EUR 904,000) in accounts receivable. It expected to reach USD 2.4 million (EUR 2.3 million) in sales in the first half of 2024 while facing USD 2.78 million (EUR 2.6 million) in operating costs.
Fernandez said in court filings that Covid-19 stay-at-home orders resulted in company revenue dropping precipitously as people stopped going out to eat, restaurants closed, and catering firms shut down operations.
Sterling Caviar CEO Jeff Sedacca told SeafoodSource in March 2022, soon after he was hired, that while the company has faced tough competition from cheaper Chinese caviar, he hoped to double sales and take the company public. He said Sterling had USD 30 million (EUR 27.2 million) in annual sales and was in the process of acquiring two aquaculture farms in Northern California. Through those acquisitions and others, the company aimed to expand into the production of tilapia, catfish, black bass, and striped bass, he added.
In a 1 March email, Sedacca told SeafoodSource he was not involved in the company’s finances or in conversations with the company’s lenders. He and Fernandez did not respond to follow-up requests for comment.
