Legal proceedings have been filed against black tiger shrimp farm Project Sea Dragon in an effort to drive the mammoth venture into liquidation.
Canstruct, the construction firm employed as a contractor on the farm in Australia's remote northern territories, filed a motion in Australia's federal court April 5 seeking to terminate the Deed of Company Arrangement (DOCA) executed by key shareholder Seafarms Group in late March, and to appoint a liquidator for the company.
The project, a huge black tiger shrimp farm, went into administration in February after Seafarms Group (SFG), announced it would discontinue funding following a contractual dispute with Canstruct.
A third party adjudicator determined late last year that Project Sea Dragon owed Canstruct AUD 13.9 million (€9 million/$9.7 million) following suspension of work in December 2021 and later termination of contracts in April 2022.
Seafarms had only allocated AUD 8.7 million (€5.6 million/$6.1 million), but executives had been hoping a AUD 3.5 million (€2.2 million/$2.4 million) injection from Seafarms' cash reserves would be enough to get construction at the Nissui-backed shrimp farm moving again.
A DOCA is a binding agreement between a company and its creditors that outlines how the company will pay its debts and continue to operate.
But Canstruct is now seeking to terminate the DOCA and appoint a liquidator for the company, which would likely result in the sale of the company's assets to repay its debts.
Project Sea Dragon is seeking legal advice and intends to vigorously defend itself, according to a statement.
Project Sea Dragon
Plans at that point were to produce 15,000 metric tons of shrimp in the first stage, working up to an eventual churn of an incredible 150,000 metric tons per year, almost a quarter of the then annual production of China, the world’s largest vannamei producer.
Seafarms reported a significantly increased loss for its last full fiscal year. In its delayed annual report, the company reported losses rose to AUD 85.4 million (€55.1 million/$57.3 million) from the prior year's AUD 25.8 million (€15.4/$16 million), primarily a result of costs associated with construction and development activities.
Construction of the first stage of the project, involving approximately 396 hectares of ponds and associated infrastructure designed to support 6,000 metric tons of black tiger shrimp production, began early in the financial year.
But by March 2022, the project was put on hold by a newly employed board following the commissioning of a review that deemed the project "unviable."
All debt funding activity was curtailed, and Project Sea Dragon contracts and most of the construction team were terminated.
Japan's Nissui is a 15 percent shareholder in the project, investing AUD25 million ($16.8 million/€15.3 million) in parent Seafarms in 2018 and a further AUD 3 million (€1.8 million/$2 million) in 2019.
