A group of Democratic US lawmakers are asking Bregal Partners, the former private equity parent of New Bedford-based Blue Harvest, to provide answers by the end of this month about where funds went from the East Coast whitefish company's messy bankruptcy.
Bregal Partners netted an estimated $100 million (€95 million) for itself by selling off assets in the two years prior to declaring bankruptcy, Massachusetts Senators Elizabeth Warren and Edward Markey and House Representative Bill Keating wrote to Bregal's Managing Partner Charles Yoon on Monday.
"Rather than using the money to settle the debts owed to the small businesses of New Bedford," the letter argues, "Bregal Partners shielded these assets from Blue Harvest’s bankruptcy filing in Delaware and pocketed the profits for itself, as it has repeatedly done throughout its 'eight-year roll up of the New Bedford fishing industry.'"
A spokesperson for Bregal did not return a request for comment.
The request comes nearly four years after two of the senators praised Blue Harvest for being awarded a highly sought after US Department of Agriculture (USDA) groundfish contract for just over $4.4 million (€3.8 million).
Bregal sold Blue Harvest to C&P Trawlers last November for $12 million (€11.2 million). Mark Felger, co-chair of bankruptcy, insolvency and restructuring with the Massachusetts firm Cozen O'Connor, confirmed with IntraFish the sale closed in December. He said it was unlikely the sale would cover all of the nearly $23 million (€21 million) Blue Harvest owes to senior bank lenders, according to bankruptcy documents.
Felger serves as the legal counsel for the trustee who oversaw the bankruptcy.
When Blue Harvest filed for bankruptcy last year, the company faced a list of creditors, with names spanning more than 40 pages of court documents.
The lawmakers are questioning the veracity of Blue Harvest's inability to resolve these outstanding debts, and are seeking answers about the company's assets prior to the sale.
In a form filed last September with a US court in Delaware, Blue Harvest stated it had around $178,846 (€170,106) in assets, a significant drop from what it listed in a voluntary petition filed with the court where it checked off it had between $50 million (€47 million) to $100 million (€93 million) in assets.
"In addition, independent contractors have revealed that Blue Harvest failed to provide severance payments or any additional information about its closure," the lawmakers said.
"Blue Harvest appeared to contribute part of its remaining funds to hiring a private security team to guard its assets – fishing gear and machinery – to prevent companies with outstanding debts from reclaiming their gear or machinery before they auctioned them off."
Since its formation, Blue Harvest cycled through numerous high-profile seafood CEOs, and even switched seafood species -- transitioning from scallops to groundfish before closing operations last year.
C&P Trawlers acquired Blue Harvest assets in Massachusetts, including eight fishing vessels, 36 federal fishing permits and over a dozen state permits.
Bregal Partners is also a significant shareholder in American Seafoods, the largest Alaska pollock fishing company in the United States. The investment firm is closing out the fund holding the Alaska pollock fishing giant. Bregal, which acquired a stake in American as part of a debt recapitalization in 2015, has been seeking a buyer for the seafood company since 2019.
