Pacific Andes subsidiaries head for liquidation as wind-down of company appears imminent
Creditors of Europaco, a subsidiary of troubled Pacific Andes International Holdings, have won a court decision in the British Virgin Islands to have the company liquidated. The move comes on the heels of a decision made recently by another court in the BVIs to appoint liquidators for three other subsidiaries of China Fishery Group, which owns Pacific Andes.
Seattle, Washington, U.S.A.-based Glacier Fish Company and Malayan Banking Berhad (Maybank), Europaco’s major creditors, were granted the appointment of a liquidator for Europaco, initiating insolvency proceedings for the company, in a 13 February decision by the Eastern Caribbean Supreme Court in the British Virgin Islands. The court appointed Ian Morton and Nicholas James Gronow of of FTI Consulting as joint liquidators of Europaco, a processor and distributor of frozen fish fillets.
In December, at the behest of Bank of America, Rabobank and Standard Chartered Bank, the BVI Commercial Court ordered the appointment of Morton and Gronow, as well as Joshua Taylor (also of FTI Singapore), as liquidators for Pacific Andes Enterprises (BVI) Limited, Parkmond Group Limited, and PARD Trade Limited.
The financially troubled Pacific Andes and its parent company China Fishery Group, owned by the Ng family of Hong Kong, have fought attempts to liquidate their assets, and are seeking to limit judicial actions affecting the company to the U.S. bankruptcy court in New York, where it filed for Chapter 11 protection in June 2016. The Ng family has argued that the appointment of liquidators would “irretrievably damage the prospects of a wider, global restructuring of the Pacific Andes Group.”
However, their argument was dismissed in both cases in the BVIs, with the judges determining it is unclear that an investigation of the subsidiaries’ assets would harm the company. In the Bank of America case, the judge also determined creditors had justification for losing confidence in the management of Pacific Andes, and that the creditors “therefore had good, positive reasons for wanting the companies to be placed into the hands of independent insolvency practitioners,” according to Carey Olson, the law firm representing Bank of America.
In a statement issued on 14 February, following the rulings, Pacific Andes said, “The company remains committed to its efforts to deliver the best possible outcome for all creditors and stakeholders, and will continue to proceed with the Chapter 11 restructuring process under the supervision of the United States Bankruptcy Court in New York.”
Having experienced sustained financial pressure for several years, Pacific Andes announced on 28 December a delay in publication of its 2016 annual results, claiming an ongoing forensic review of the company prevented it from determining its assets and liabilities. The company said it expected to release its 2016 annual results on or before 30 June, 2017 – acknowledging that such a delay constituted a violation of rules of its listing on the Hong Kong Stock Exchange. However, trading of the company’s shares was already suspended in 2015, limiting the actions the exchange can take against the company.
In its Q3 2016 financial filing, Pacific Andes reported major losses, blaming insufficient funding for working capital and lower catches due to El Niño. During the six months ended 28 March 2016, Europaco Limited and U.S.-based National Fish & Seafood, Pacific Andes’ principal subsidiaries recorded a combined turnover of HKK 1.3 billion (USD 167 million, EUR 158 million), a 37.4 percent year-on-year decrease. That resulted in a loss over the six-month period of HKD 120 million (USD 15.5 million, EUR 14.6 million), up from a HKD 105 million (USD 13.5 million, EUR 12.8 million) loss in the same period ending in March 2015.
According to court documents, Maybank is owed USD 135 million (EUR 128 million) by Pacific Andes subsidiaries, to which it lent USD 198 million (EUR 187 million) to build several seafood processing facilities, including more than USD 100 million (EUR 95 million) lent to support the construction of a facility for Europaco.
Bank of America is owed at least USD 15 million (EUR 14 million), according to Carey Olson, and Pacific Andes’ debts to its other creditors are estimated in the hundreds of millions of dollars.