New Bedford Light reporters Will Sennott and Colin Hogan discuss the upcoming Blue Harvest bankruptcy auction, which could have major repercussions on the New Bedford fishing fleet, in our latest Inside The Light podcast.
For more than a year, New Bedford Light reporter Will Sennott has been covering Blue Harvest, once the largest groundfishing company on the east coast. Will has looked into the company’s ownership structure, the desperately low wages it pays to its fishermen, and the regulations that have enabled its rapid expansion.
In September, Blue Harvest filed for bankruptcy. Will is covering what this bankruptcy means for the fishing industry and for the trail of small businesses across New Bedford who are left holding a bill while the bankruptcy progresses through a United States District Court in Delaware.
This is Colin Hogan and you’re listening to Inside The Light.
Joining me is Will Sennott. Thanks for joining me today, Will.
Yeah. Glad to be here, Colin.
So tell me about what happened when this bankruptcy was first announced.
So this came to us really from a text message from a captain, and it happened before the bankruptcy was even filed in court. We got a text from a captain coming in on a ground fish boat. And he told us that the company told him this was the final voyage of the Blue Harvest Empire. They were told by management that Blue Harvest was shutting down all its operations. This was September 1st, and it really caught everyone off guard — from the managers who were forced to tell the captains to the deckhands. All kind of wondering, why is this happening? What are we gonna do?
That first night of the shutdown, we went out to the boat. It was the very last boat unloading of the Blue Harvest trip.
They were unloading some 175,000 pounds of redfish and pollock and haddock. And, I mean, it really showed you the scale of this operation. And it was a bit chaotic. I mean, the captain of the boat was worried that his crew and he weren’t gonna be paid. So they actually held the boat captive overnight. They, you know, they maintained command of the vessel to make sure they were gonna get paid.
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This is just the intensity of the moment. It’s a big paycheck, 175,000 pounds of fish. They knew the maritime law, which is if they have command of the vessel, it’s their vessel and, you know, it’s gonna be theirs until they get paid. And they did get paid, those fishermen.
Wow, that’s quite a scene.
About a week later, we learned that the reason it was shutting down is ’cause it was declaring bankruptcy. Chapter seven bankruptcy. There’s no restructuring; it’s a liquidation of its assets. The biggest groundfish company on the East Coast will completely dissolve.
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So, can you tell me more about your previous reporting on Blue Harvest, about this company going back even before the bankruptcy?
Yeah. We started covering Blue Harvest looking at something else. We wanted to look at ownership of the fishing industry. It’s hard to tell all these boats on the waterfront — they’re all different colors. You can’t tell what fleet is what. And we wanted to know who really owns this waterfront. And we quickly landed on Blue Harvest. At the time in 2021, it was the largest groundfish company. It had its maximum amount of 15 scallop boats and it had grown really quickly. It started in 2015. This fleet was built in eight years.
And the reason it was able to expand so fast as opposed to a company like Eastern, which has been built over 40, 50 years, is because it was owned by private equity that pumped a lot of capital into acquisitions. And they just quickly gobbled up all these mid-size fleets up and down the eastern seaboard from Virginia to New Bedford to Maine. They were oriented in becoming this kind of vertically-integrated scallop groundfish giant.
So we started covering them to look at the ownership. What does it mean for private equity to own a piece of the fishing industry? What does it mean for the local economy? As anyone who lives in New Bedford knows, the Port of New Bedford is a beast of its own. It generates over $400 million a year — more than the city’s annual budget it generates in revenue.
A lot of that stays local, stays with the crews, the captains, stays with the processing plants, the people who work there.
But with private equity, the lion’s share — the owner share, which is the technical term of the industry — being kicked off to a New York City private equity firm, yeah that does do substantial harm to the economy of the whole city. And that’s what the mayor said in our interview at the time. I’m gonna paraphrase him here, but he said: Without any loyalty to the place, business decisions can become cold and harsh. And it turned out to be quite true.
And who does this lion’s share go to?
Through this investigation, we found that the owners of this private equity firm is a family foundation owned by a Dutch family, one of the wealthiest families in the Netherlands called the Brenninkmeijer family.
They have holdings all around the world from timber in South America to cotton agriculture, to coffee agriculture, to fossil fuels like, you know, fracking and exploration in Appalachia, to sweatshops in Bangladesh — the place with the lowest paid labor in the world.
This family, their net worth … Forbes put them at around $30 billion. You know, a gargantuan <laugh> amount of money, right? So when you think about the lion’s share: the equity, the capital of the fishing industry, it went to this family’s bottom line.
So there’s money moving all over the world, but here in New Bedford, how have small businesses been affected since the bankruptcy was filed?
What a lot of people don’t see about the fishing industry is all the smaller companies that kind of prop up the whole industry. It’s not just boats out there fishing, it’s endless fuel suppliers. It’s net vendors, trawl manufacturers. It’s people who sell gloves and boots. It’s a real economy of its own all oriented around the fishing industry. And when Blue Harvest declared bankruptcy, a lot of these companies, they operate — on an arrangement with a big company like Blue Harvest — by building up a tab and they pay it back over a month or a few weeks.
And Blue Harvest declared bankruptcy so quickly, a lot of people had outstanding debts. I think of Raiders Manufacturing, a longtime local company.
You think of New Bedford ship Supply, which said they were owed a few thousand dollars. You think of the ice company, Crystal Ice, on the waterfront. Endless small businesses, so many we couldn’t even reach them all, were owed a thousand dollars here, $10,000 there, $50,000, a hundred thousand dollars. It adds up to a pretty substantial tab that Blue Harvest the Brenninkmeijer are walking out on.
Bregal Partners, the private equity firm that owns Blue Harvest, they’re now claiming in bankruptcy court that they are owed north of $200 million. You put that up against this $50,000 as a significant amount — in a way it’s probably more substantial than the $200 million that Bregal Partners claims it’s owed.
$200 million dollars is a lot of money. How does this private equity firm get to that number?
I’ll be honest with you, the math does not quite make sense to me.
It’s tied up in how private equity works, which is they have all these holdings and they’re essentially gonna claim the losses against their gains in the year. So they have an incentive to make it as high as possible. This is all part of the financial playbook with private equity. But those who are left struggling with no hope of being paid back are — like we said, the suppliers, the trawl manufacturers — they’re not secured creditors, and they’re expecting not to see a dime of what they’re owed.
It’s not part of a financial game for them.
So recently, what are any updates in the bankruptcy process?
Right now, the big question on everyone’s mind is what is going to happen with the boats? And there’s a few answers to that.
On the first leg of it, there is the sale of the remaining assets. Blue Harvest still owns the largest groundfish quota in the whole New England fishing industry. It’s about one fifth of the whole industry. The mission of the trustee is essentially to auction it off — put it on the chopping block. It’s unclear if we’ll be sold in one big parcel to a bigger company or a company trying to expand, or if it’ll be broken up into smaller pieces. That’s what nobody knows. And we’re waiting till November to hear what the plan is.
A note from Will here: since recording this, the trustee of the bankruptcy has expedited the auction to Nov 8.
…On the other end, some of their assets were already sold. You go back to 2019 and the company was already beginning to divest itself. It sold off its processing plant, which was kinda the first sign it was in financial trouble. You know, exchanging a big cash injection for lease payments. They’re paying to lease the facility they formerly owned, which is a sign of financial struggle.
Then you look to last year — November of last year — they finished selling off all 15 scallop vessels in their fleet. That’s over a hundred million dollars of assets right there, which are all gone.
Wait. What do you mean they’re all gone?
They’re not a part of the assets that were listed in the bankruptcy filings, which makes you wonder where all that money went. Did it go back to the private equity firm? Did it get reinvested? Doesn’t look like it was reinvested, because it would probably wash back out in these bankruptcy filings.
Lastly, some of their fleets are being scrapped. They’re trying to minimize… or do some damage control. Some of their boats that were in poor condition, they sent them to their final fate — their final destination in the junkyard.
So there’s a lot of boats that are left over from this. Some, as you mentioned, are going to the junkyard. Some are still out on the waterfront. In your latest story you described what’s happening to some of these boats, including the tale of their last owner, Carlos Rafael. Can you tell me about that? Including what’s gonna happen to these boats and these permits now?
Yeah, this is, I guess in a way, the end of two sagas of two New Bedford fishing giants with very different backgrounds and origins who eventually both ended up meeting their demise in court.
Blue Harvest — probably its biggest acquisition in one bundle was the purchase of the groundfish boats that belonged to Carlos Rafael, known in the media as the Codfather. In 2016, he was found guilty of fraud related to mislabeling fish, and was eventually sentenced to over four years in jail.
In addition to paying fines and being forced to sell his fleet to Blue Harvest in 2020 while he was actually locked up in Fort Devons, Massachusetts. It immediately made them the biggest groundfish company overnight.
It’s interesting, this kind of dichotomy between Carlos Rafael, right? This immigrant from the Azores who came here and started as a fish cutter and over 40, 50 years built this empire, a crooked empire, <laugh> but an empire nonetheless… with Blue Harvest, which is this private equity firm owned by a family of Dutch billionaires. Not quite immigrants themselves, I’d say <laugh> more like: their capital flows without regard for any borders. Sure, their company started 150 years ago with their family firm with Clemens and August Brenninkmeijer peddling textiles through <laugh> through the Netherlands. But their ascent has stretched over 150 years of growing capital and holdings — industrial holdings — through the world.
It was this story of a transfer of wealth, a transfer of power from your local corrupt gangster, if you wanna call him that, to the world of the global gangsters of finance.
When Carlos Rafael sold Blue Harvest those boats in 2020 — we had a beautifully profane interview — he said, yeah, you know, some of those boats, they paid me $50,000 for it. It was $50,000 too much. Some of those boats they bought were worthless. What they were going for was the permits that he owned. His permits alone represented some 12% of the groundfish industry. A lot of those boats, which couldn’t be saved, kind of sat idle at the docks for the last three years as Blue Harvest tried to figure out what to do with them.
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It’s funny, it’s more expensive to get rid of a boat than to let it wither away on the dock.
So in early October, we got a text that one of Carlos Rafael’s boats was being carved up into scrap on the waterfront. It was one of the boats that Blue Harvest had bought from Carlos Rafael, and it was one of the boats they couldn’t save.
It was carved up. Into scrap metal.
As Blue Harvest inches towards this final auction of their boats, they are looking at what to do with their remaining liabilities, I guess. And one big liability is if one of these boats unattended sinks in the harbor; they need to get rid of them to avoid environmental fines of gas leaks.
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It really is the final chapter of not just the Carlos Rafael fleet, but Blue Harvest, which was trying to modernize and save the nation’s oldest export industry but ended up, almost ironically, sinking at the docks themselves.
Well, Will, thank you for coming on today.
Yeah, thanks for, thanks for having me on, Colin. This has been fun.
That’s it for this episode of Inside the Light, a podcast by the New Bedford Light. My guest today was Will Sennott. My name is Colin Hogan. The theme music you heard was by Kellen Riell.
You can find more in-depth stories on our website, newbedfordlight.org. And don’t forget: The New Bedford Light is supported by donations from the community, so our stories are always free, and there’s never any paywall.
Email Colin Hogan at email@example.com