NEW BEDFORD — The last of the fishing fleet that once belonged to the “Codfather” is being carved into scrap metal, part of the fallout from the collapse of Blue Harvest Fisheries, which filed for bankruptcy in early September and is now making arrangements to liquidate its assets.
On Friday, workers used hydraulic shears to rip into the rusted, sea-green hull of the Ilha Brava II. Piece by piece, the 76-foot vessel was crushed into scrap and trucked to a recycling center in Middleboro.
The vessel once belonged to a massive fleet owned by New Bedford seafood magnate Carlos Rafael, also known as the “Codfather.” Later, in 2020, after Rafael’s fraudulent operation landed him in prison, he sold that fleet to what was then a new player on the waterfront: Blue Harvest Fisheries. The private-equity backed fishing venture that declared bankruptcy last month is ultimately owned by a family of Dutch billionaire industrialists called the Brenninkmeijers.
By Monday, the only trace of the Ilha Brava II was the keel. It remains barely floating in the harbor — a testament to the tattered, sunken legacy of two of the largest fishing empires on the East Coast, both of which had owned the vessel and both of which met their demise in court.
Neither seafood giant ended its reign with a balanced bank account.
Rafael would return to New Bedford a rich man upon his release from prison in 2021, pocketing the $100 million he received from the government-mandated sale of his fabled fleet. The private equity firm that owns Blue Harvest Fisheries, on the other hand, is now claiming in bankruptcy court that it stands to lose over $200 million from its foray into the fishing industry. It also owes millions to countless small businesses on the New Bedford waterfront.
“They said it would be no problem to fill my shoes,” Rafael said, speaking over the phone in an interview with The New Bedford Light. “They filled my shoes, all right. They f—ed people for millions of dollars. That’s how they filled my shoes.”
From sea green to royal blue
Rafael’s negotiation with Blue Harvest began from his prison cell in Fort Devens, Massachusetts.
Over decades, Rafael, an immigrant from the Portuguese island of Corvo, had ascended from a fish cutter to owning the largest groundfish company on the East Coast. It’s an empire he built through cutthroat capitalism. As fishing regulations tightened, and hard times fell on the industry, he seized the opportunity to expand; buying the businesses of friends and rivals alike as they teetered on the brink of bankruptcy.
“He would take you out to lunch, he’d buy you a drink, all while bleeding your business to death,” said one former New Bedford fisherman, who asked not to be named.
Rafael had been to prison once before, serving a brief sentence in the early 1980s for tax evasion. But this time was different. In 2016, he was caught in an IRS sting operation involving federal agents posing as Russian mobsters attempting to buy his fleet. He was sentenced to 46 months in prison for fraud related to mislabeling fish. As part of his 2017 settlement, fisheries regulators forced him to suspend all fishing operations and sell his fleet.
Blue Harvest Fisheries was aggressively expanding at the time of Rafael’s downfall.
The company was flush with capital from its billionaire-backers: the Brenninkmeijer family. The family wealth, with estimates ranging from $20 billion to $30 billion, began with the Dutch textile trade in the mid-1800s and has since metastasized into industrial holdings across the globe. Their businesses today include: timber in South America, shopping plazas across Europe and sweatshops in Bangladesh.
In 2015, the family’s personal private equity firm, Bregal Partners, set its sights on acquiring “fishing rights” in U.S. waters. It acquired American Seafoods, the West Coast seafood giant, and founded Blue Harvest Fisheries. By 2020, Blue Harvest had acquired entire fleets up and down the East Coast. It was attempting to corner the New England groundfish market and saw its greatest opportunity in acquiring the Rafael fleet.
Rafael’s sea-green boats, each emblazoned with the trademark “CR” across the bow, had spent three years stacked and idle on the New Bedford waterfront as Rafael served out his sentence. Their presence at the dock, instead of at sea, was a constant reminder to the city’s fishermen of the power vacuum that Rafael had left behind — a vacuum that Blue Harvest wanted to fill.
Three years through his sentence in federal prison, Rafael had already netted $75 million on the sale of his scallop boats. He wanted $25.8 million for his groundfish boats, he said, but when Blue Harvest balked, he sold five of his top-earning boats to another company for $7 million. He says he forced Blue Harvest’s hand by threatening to break up the rest of his fleet. In 2020, Blue Harvest paid Rafael $19.8 million for the last 12 vessels and 27 groundfish permits that gave him his title as “Codfather.” The assets were folded into the Brenninkmeijer’s global industrial portfolio.
Owned by a billionaire Dutch family, Blue Harvest Fisheries has emerged as a dominant force in the lucrative fishing port of New Bedford. Its business model: benefit from lax antitrust rules and pass costs on to local fishermen.
“They actually did me a f—ing favor,” Rafael said. “They thought they were going to outsmart me. They ended up getting f—ed. They ended up paying the price.”
Many of the prized boats from Rafael’s fleet were repainted from sea green to the royal blue of the Blue Harvest fleet. Some began fishing again. Some were renamed, like the Schelvis, which is the Dutch word for haddock. The company spent an additional $2 million attempting to make three dilapidated vessels seaworthy, according to Blue Harvest president Chip Wilson. But others were too far gone.
“There were a number of vessels that were very much past their prime and we determined that the cost to rehabilitate them was more than replacing them with new, given the increase in productivity of a new hull,” Wilson wrote in an email to The Light.
On paper, the permits attached to the defunct vessels were scuttled to the company’s “permit bank,” Wilson testified in bankruptcy court on Thursday. Those permits, most of which were part of the Rafael fleet, were held by Blue Harvest under a corporation called “IMT Asset Co.,” which stood for “Island of Misfit Toys,” Wilson told the court.
Without the permits, however, the vessels alone were worthless. Those boats, which included the Ilha Brava II, the Ilha Do Corvo and two others, remained sea-green, rusting and tethered to the dock — an albatross around the neck of a company that was attempting to “modernize” the nation’s oldest export industry.
Now, the Blue Harvest fishing vessels that are still seaworthy are frozen in bankruptcy court, pending liquidation. The vessels that the company couldn’t save, including some that once belonged to Rafael, are meeting their final fate in a scrap yard.
Workers who were scrapping the Ilha Brava II at the port of New Bedford on Friday said they’d been contracted by Robert B. Our, a Harwich-based company. It specializes in construction and septic pumping but also has a marine division, the purpose of which is unclear on its website. The company declined to comment.
“They are doing the city a favor by getting rid of it,” Rafael said. “I only got about $40,000 for that boat. But it was $40,000 too much. It’s not an asset. It’s a piece of sh—t.”
Stripped for assets
In the weeks after Blue Harvest filed for bankruptcy, over 1,000 companies and independent contractors received a white envelope in the mail. “No property appears to be available to pay creditors,” a Blue Harvest attorney wrote to all its creditors, which ranged from banks and law firms to welders and supply stores.
On Oct. 12, Wilson, president of Blue Harvest, faced those creditors in bankruptcy court for the first time. The proceeding sprawled over two hours as Wilson painstakingly detailed the assets tucked into 40 individual subsidiaries and holding companies. Blue Harvest’s remaining assets amounted to about $40 million.
Wilson did not present any information about its creditors. But the week before the hearing, Blue Harvest disclosed a surprising detail buried in hundreds of pages of bankruptcy filings. Bregal Partners, the private equity firm owned by the billionaire Brenninkmeijer family, claims that it is owed $209 million. That includes notes, warrants and management fees, according to its filings.
The private equity firm is listed as an unsecured creditor, no different than any other small businesses or contractor owed money by Blue Harvest at the time of its collapse. Most of those companies interviewed by The Light claim to be owed between $50,000 and $100,000 each. Bregal’s claim of $209 million dwarfs any other, likely making it the one left holding the heaviest bag as the short-lived fishing empire dissolves.
When the hearing, held on Zoom, opened up to questions, Wilson declined to expand on why Bregal Partners claims it is owed $209 million. He also declined to comment on the location of roughly $100 million that the company netted after selling its scallop fleet in late 2022. That money does not appear to be listed in the company’s assets, with some financial experts interviewed by The Light speculating that Blue Harvest may have engaged in a practice called asset stripping — selling off its valuable assets prior to declaring bankruptcy.
“This isn’t the appropriate time or place for any of that,” Wilson said when asked by The Light about possible asset stripping toward the end of the hearing.
Meanwhile, Blue Harvest’s most storied but least profitable assets are undergoing a more literal round of stripping. The Ilha Brava II is one of two to four boats formerly owned by Rafael and sold to Blue Harvest that have been quietly crushed into a bundle of steel along the port of New Bedford.
Rafael said he was not sentimental to hear his former boat had been carved to scrap. He has since transferred his wealth from the fishing industry into real estate, buying the Merchants National Bank in downtown New Bedford in 2021. Nor did he say he felt particularly sorry for those at the helm of the failed fishing empire that tried to replace him.
“I don’t mind that I went to jail. I came out on top,” he said. “The government thinks they won the war. Actually, they lost the war. I walked away with $100 million. They can all go f— themselves.”
Email reporter Will Sennott at firstname.lastname@example.org.