A group of six interconnected seafood processing companies has filed a second amended reorganization plan in Alaska bankruptcy court, proposing to pay all creditors in full through the strategic sale of major assets. The plan comes after severe business disruptions caused by the Russia-Ukraine war and an industry-wide salmon market downturn.
Marine Fishing International, Inc. and its affiliated companies filed the amended disclosure statement on March 31, detailing how they intend to liquidate certain properties to satisfy approximately $27 million in claims, including a $20 million secured loan from Cathay Bank.
"The Plan provides for full payment of all creditors from the liquidation of certain assets and the proceeds of a refinance of the existing secured financing or a sale of additional assets, all within a relatively short period of time," the debtors state in the court filing.
The companies, which collectively generated over $41 million in revenue in 2023, filed for Chapter 11 protection in August 2024 after facing a perfect storm of challenging market conditions and geopolitical complications. The bankruptcy includes Whittier Seafood, which operated a salmon processing facility in Alaska; Marine Fishing International, which imported and distributed Russian king crab; and Salacia, which owns a partially constructed food processing plant in Washington valued at $37 million in its current state.
According to the disclosure statement, the companies' financial troubles stem largely from external factors. Russian sanctions following the Ukraine invasion devastated Marine Fishing International's crab importing business, which relied on Russian waters for 95% of its product. The situation worsened when Russian authorities revoked fishing licenses from and ultimately expropriated Tefida, a Russian crab company owned by the debtors' principal, Aleksey Kozlov.
"In response to the sanctions imposed on Russia by the US and the EU, Russia retaliated against Russian businesses with American connections," the disclosure statement explains. "In June 2023, Russia revoked all of Tefida's fishing licenses...and in the second quarter of 2024 the Russian government confiscated the stock of Tefida for the benefit of the state."
Simultaneously, Whittier Seafood suffered from a dramatic drop in salmon prices, resulting in $7 million in losses in 2023 and forcing the closure of its Alaska processing facility.
The reorganization plan centers on a recently negotiated Plan Support Agreement with Cathay Bank, the primary secured creditor. The plan outlines a series of asset sales, including:
- Completion of a pending sale of significant Whittier assets
- Marketing and selling the Salacia processing plant and equipment in Washington, valued at $48 million combined
- Selling the Modys Building in Bellevue, Washington
Aleksey Kozlov, the authorized agent for the debtors and a personal Chapter 11 debtor himself, has been working to restructure the companies after Cathay Bank accelerated loan payments in 2024, demanding full repayment of approximately $20 million by June 18, 2024.
The debtors' financial advisor Hilco Corporate Finance has already launched marketing efforts for the Salacia assets. The disclosure statement indicates that if the Whittier sale closes and Salacia assets sell for even 60% of their appraised value, there should be sufficient funds to pay all creditors in full.
The case is proceeding in the United States Bankruptcy Court for the District of Alaska at Anchorage, Case No. 24-00139, with Judge Gary Spraker presiding. The debtors are represented by James L. Day, Thomas A. Buford, and Lesley Bohleber of Bush Kornfeld LLP.
This article was prepared using Stretto Conductor, our new AI-powered assistant that's here to help. Stretto Conductor was able to create this summary of a 61 page court filing in less than a minute. Always review the underlying docket filings for accurate information. The information and responses generated by Stretto Conductor may contain errors or inaccuracies and should not be relied upon as a substitute for professional or legal advice.