Fish processor faces liquidation

Posted: Sunday, October 15, 2000

A former Kenai fish processor will be liquidated, but it remains unclear whether the proceeds will cover more than $2 million in estimated debts to processing workers, fishers and vendors.

Meanwhile, the fate of the former Dragnet Fisheries plants in Kenai and Dillingham, which Chris Fischer, president of bankrupt King Fischer Fisheries LLC, tried to buy, remains unclear. The purchase fell through, and the estates of Rod Cherrier and Earl King have taken the plants back, said Jay Cherrier, president of Cherrier Fisheries in Anchorage.

"They are still for sale, but they're not listed at this point, because we're trying to find out the damage and so on, so we know how to proceed," he said. "There was a lot of damage. There were a lot of things missing. They just left the place -- it was just a mess -- and walked away."

Cherrier said his crew has spent three weeks cleaning the Kenai plant.

"They had something like 150 totes of garbage stacked in the back yard. They didn't take the garbage to the dump for the whole season," he said. "It's one thing to go out of business. It's another leaving the business in a shambles."

He said the owners likely will not decide what to do with the plants, or whether to run them next summer, until after the state releases its 2001 salmon forecasts.

Chris Fischer could not be reached last week. Ron Goss, a Seattle attorney reportedly representing King Fischer, did not return calls Friday.

Gary Sleeper, attorney for Larry Compton, the trustee appointed to liquidate King Fischer assets, said the debts the company listed in its bankruptcy filing include $1.05 million to fishers, $143,000 in wage claims and $892,000 to unsecured creditors -- mainly vendors who provided fishing gear, groceries and other items to fishers using King Fischer purchase orders.

He said the debts to fishers are mainly for the Bristol Bay fishery, and he believes all of King Fischer's Cook Inlet fishers have been paid. He said Compton has not yet audited the debts King Fischer listed.

By statute, fishers have liens on the product and the property of the processor, he said. They probably will be treated as secured creditors and likely will be first in line for proceeds from the liquidation. In general, wage claims are considered unsecured but have a priority, he said. However, some wage claims could be considered secured.

Last summer, Fischer said, the company formed in March and was buying the former Dragnet plants. Sleeper said the situation is confused by the fact that Chris Fischer agreed to buy the plants, not the company, which owes the present debts to fishers, processing workers and vendors.

Fischer said last summer that the company fell into financial trouble when private backers ran into delays arranging financing. Contract terms forbid him from revealing his backers' names, he said, but there were two, one in Venezuela and one in Israel.

The Bristol Bay season was winding down when the company filed for Chapter 11 bankruptcy protection in July. Sleeper said Fischer also filed for personal bankruptcy last summer, but has since asked the court to dismiss the case.

After the company filed for Chapter 11 protection, Fischer said, it had bought about 2.4 million pounds of salmon in Bristol Bay and about 60,000 pounds in Cook Inlet. After the bankruptcy filing, King Fischer operated briefly in Cook Inlet as a buying station for a company called Fish Hawk.

Sleeper said King Fischer's assets will be liquidated, and the company will not reopen.

King Fischer's primary assets are earnings from fish it bought last summer, he said, and those all have been sold to Japanese buyers. King Fischer made a $500,000 payment in July to the Cherrier and King estates, Sleeper said, and Compton is considering court action to get that back.

King Fischer had $496,000 in an escrow account, he said, and that has been transferred to the trustee's account. In addition, Compton received $100,000 from sales to an independent buyer and expects another $100,000 from similar sales. Sleeper said he could not immediately say where any other proceeds from sales of the King Fischer pack may have gone.

Assuming all the fish were frozen, the 2.4 million pounds King Fischer bought in Bristol Bay could have produced a pack worth around $3 million in Japan, said Gunner Knapp, an economist with the University of Alaska Anchorage. He said prices the Japanese paid for frozen sockeyes were so poor that most processors appear to have lost money.

Sleeper said King Fischer has a few small pieces of equipment and a $75,000 processing line also might be sold. Aside from that, the only additional revenue expected is from retroactive payments for the fish sold in Japan. Retroactive payments could bring another $250,000 to $800,000, he said.

"But the quality of the fish is not as high as was expected, so we're looking at the low end of that. The Japanese are examining the inventory and regrading the fish," he said.

Adding the numbers, the liquidation could bring $950,000 to $1.5 million, plus maybe another $500,000 if Compton tries to recover the July payment to the estates. It remains unclear whether the proceeds will be enough money to pay all creditors.

"Until we sweep into the corners and find what's out there, until the price of the fish is known, until we price the equipment and see what it can be sold for, we just don't know," Sleeper said.



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