Seafood companies historically run on high-risk, low-margin business models. So when the credit market plummeted prior to the recession proclamation, followed by restaurants folding and sticking lots of seafood companies for oodles of money, the industry has seen a fair amount of dire news. In January the Wapo Group in Monterey Park, Calif., filed for bankruptcy. That same month, Berry & Sons Seafood in Monroe, N.C., ceased operations.
“We tracked a total of 75 significant closings or bankruptcies last year, including some sizable seafood-impacting losses, most of them distributors and wholesalers, but there were a few supermarket chains as well,” says George Babeu, president of One Source Risk Management. A subsidiary of Seafax, in Portland, Maine, One Source tracks restaurant and supermarket chains as well.
One seafood chain to undergo recent restructuring is the Minneapolis-based Oceanaire Seafood Room, which was purchased by Landry’s Restaurants in April. Oceanaire had filed for bankruptcy last year and closed four of its 16 locations. The remaining 12 sold for $6.6 million and Landry’s assumed $17 million in debt.
Alvaro Otoya, president of Summar Financial LLC in Miami, has seen business from seafood companies increase in recent months, though seafood represents just one of the many industries looking for factoring solutions, which is what Summar specializes in.
“Right now credit-insurance companies are making a big effort to give credit limits to different buyers out there, but the banks have not reacted positively toward credit yet,” Otoya says. “That’s presented big opportunities for factoring companies to do more business, and to take clients away from the banks.”
To read the rest of the story on credit and factoring, click here. Written by SeaFood Business Contributing Editor Lauren Kramer, the story ran in the July issue of SeaFood Business magazine.
