NEW BEDFORD — Tor Bendiksen knew that Blue Harvest Fisheries was in financial trouble in early September, when the company bounced a $12,500 check.
His company, Reidar’s Manufacturing, specializes in building trawl gear for fishing vessels. It is one of many small, family-owned businesses that had come to both support and depend on Blue Harvest as it expanded to become the single-largest groundfish company on the East Coast. And at the time the first check bounced, he was already working to fill another order — this one for more than $50,000 — to build new nets for the Blue Harvest fleet.
But days later, Bendiksen received notice that Blue Harvest had declared Chapter 7 bankruptcy. Then, last week, Blue Harvest filed an additional notice claiming that it does not have sufficient funds to settle its debts, which according to filings total over $100 million.
“No property appears to be available to pay creditors,” the company wrote in a Sept. 13 notice to its creditors. “Creditors cannot demand repayment.”
Bankruptcy experts contacted by The Light describe the legal posturing as little more than a heist staged by the private equity firm Bregal Partners, which owns 89.5% of Blue Harvest, including its fishing vessels and permits. The private equity firm netted a bundle of cash, estimated at about $100 million, by selling off its most valuable assets in the two years prior to declaring bankruptcy. Now, they say, the private equity firm is taking off with the spoils and leaving behind countless small businesses in New Bedford saddled with its debt.
“If we don’t get what we are owed, it is going to be a big hit for our company,” Bendiksen said in an interview with The Light. “I don’t know if we will ever fully recover from it.”
For Blue Harvest and Bregal Partners — which is part of a fund with over $18 billion under management — the $50,000 or so owed to Bendiksen is a small fraction of the debts the company had racked up during its eight-year roll up of the New Bedford fishing industry. But for Bendiksen, he said the notice that he will not be paid spells a serious financial blow.
And he’s not alone.
More than 1,000 independent contractors and companies will be left holding the bag as the private-equity backed fishing venture goes belly up, according to a list of creditors published in the bankruptcy filings. It includes many fishermen who had worked for Blue Harvest and countless small businesses on the New Bedford waterfront: welders, mechanics, supply stores and shipyards.
“It’s definitely going to be a hit,” said Mario Pereira, office manager at Crystal Ice, which supplies ice to fishing vessels. “The whole waterfront will feel it.”
The missing $100 million
When Blue Harvest declared bankruptcy, it valued its assets between $50 million and $100 million. Its liabilities, or debts, are estimated between $100 million and $500 million, according to the initial filings.
Unsecured creditors, most of which are the small businesses in New Bedford, will only be repaid if the assets cover what the company owes to the secured creditors, which generally are only the banks. In Blue Harvest’s case, the company has claimed there is no margin to repay the unsecured creditors.
“This means that creditors generally may not take action to collect debts from the debtor or the debtor’s property,” the company wrote in its notice to creditors.
But less than one year before the bankruptcy, Blue Harvest and the private equity firm that owns it were well underway stripping the company of its assets. They had already sold the waterfront processing plant for $20 million, according to property records. And in November of 2022, the company finished selling off its fleet of 15 scallop vessels and permits — which experts estimate netted about $100 million.
The cash earned from selling the scallop vessels does not seem to be listed in the company’s assets when it filed for bankruptcy. So where did that money go?
“It goes into the private equity firm’s pockets,” said Eileen Appelbaum, co-director of the Center for Economic and Policy Research, a Washington D.C. think tank, where she specializes in private equity. “We call that asset stripping.”
The private equity firm, Bregal Partners, which describes itself as focused on acquiring “fishing rights,” is ultimately owned by one family of Dutch billionaire industrialists — the Brenninkmeijer family.
Jeoffrey Burtch, trustee of the Blue Harvest bankruptcy, declined to comment.
After selling its processing plant and scallop boats, which are the most expensive permits in the seafood industry, Blue Harvest was left with only its groundfish fleet. It is still the single-largest groundfish company on the East Coast, owning as much as 20% of permits for some high-volume species, but those assets alone are not enough to cover their debts.
It’s all part of the private equity firm playbook, Appelbaum said: “They buy a company, they strip it, they declare bankruptcy and they walk away.” As for the small businesses and contractors in New Bedford left with unpaid invoices, she said, “They are left high and dry. That money is gone.”
‘Left to pick up the crumbs’
For some of the small businesses, their losses are slight, in the range of a few thousand dollars. That is the case for New Bedford Ship Supply, an outfitter that sells things like gloves and boots, usually on credit that is deducted from a boat’s settlement. It’s also the case for local businesses like Crystal Ice and packaging company Skip’s Marine.
“We’re left holding the bag. We’re not happy about that,” said Steve Xavier, vice president of Skip’s Marine. “In the end, we feel bad for the cutters, the captains and the crews. They’re left holding the bag as well.”
For others, the losses are larger. Law firm Kelley Drye & Warren — which provided legal services to Blue Harvest on “groundfish acquisitions” between March and September of this year — says it is owed a total of $178,082. The law firm is the first and only to file a claim in the bankruptcy, and declined to comment when contacted by The Light.
And as checks bounce, Bendiksen and others have not heard a word from Blue Harvest management, 17 of whom were laid off themselves in the weeks before the company filed for bankruptcy.
Companies with outstanding debts can not reclaim their gear or machinery, according to the filings, and are threatened with “punitive damages” if they attempt to do so. All assets are locked behind Blue Harvest’s gated facility on the Fairhaven side of the port, guarded by a team of private security guards — likely the last company to be contracted by the failed, billionaire-backed fishing venture.
“The private equity folks made out. They’re getting away scot-free,” Bendiksen said. “And they’re leaving the rest of us here to pick up the crumbs.”
Email reporter Will Sennott at email@example.com.