The Ukraine war has been blamed for the recent bankruptcy filing of Whittier, Alaska, U.S.A.-based seafood-processing and -trading firm Whittier Seafood.
In a Chapter 11 declaration in the U.S. Bankruptcy Court for the District of Alaska filed 19 August, Whittier Seafood Owner Alexey Kozlov said his company was brought down by its ties to Marine Fishing International (MFI) and its sister firm JSC Tefida, a Vladivostok, Russia-headquartered crab-fishing enterprise whose assets were seized by the Russian government in 2023 after the U.S. tightened restrictions on imports of Russian seafood in response to Russia’s invasion of Ukraine.
“The embargo suddenly rendered MFI unable to import its primary product,” Kozlov said. “In response to the sanctions imposed on Russia by the U.S. and E.U., Russia retaliated against American businesses with Russian connections. In March 2023, Russia revoked all of Tefida’s fishing licenses. The resulting damage to MFI was twofold. First, Tefida was unable to supply king crab to MFI, and MFI, in turn, was unable to supply king crab to its buyers. Second, Tefida was unable to repay MFI for a series of loans related to Tefida’s fishing vessels.”
That seized quota was eventually auctioned off by the Russian government, which justified the seizure by alleging MFI was under illegal foreign control, with Tefida receiving no compensation. That was devastating for MFI, which had loaned Tefida around USD 10 million (EUR 9.1 million) in 2020 and 2021 to upgrade its crab fleet with the hopes of it taking advantage of its more than 580 metric tons of king, bairdi, and snow crab quota in previous government auctions. By the time Tefida’s appeals of the seizure had been exhausted in Q2 2024, the company still owed MFI around USD 6.3 million (EUR 5.7 million).
“Because Tefida has no assets and is no longer able to operate, I do not expect to collect the balance,” Kozlov said.
MFI was also hurt by U.S and European consumers turning away from seafood of Russian origin, causing the value of MFI’s existing inventory to decline and forcing it to sell at lower prices, according to Kozlov.
Furthermore, Whittier Seafood, which generated USD 41 million (EUR 37.1 million) in revenue in 2023, was stung by a downturn in Alaska’s salmon sector. The company acquired the former Great Pacific Seafoods processing plant in Whittier in 2017 and began processing sockeye, keta, and king salmon at the plant, hiring 290 seasonal employees working from May to September. In 2023, the plant generated USD 16 million (EUR 14.5 million) in revenue, though Kozlov said in his bankruptcy declaration it operated at a USD 2 million (EUR 1.8 million) loss in 2022 and USD 7 million (EUR 6.3 million) deficit in 2023.
“The salmon market has historically experienced price fluctuations with lows and highs rotating over a five- to seven-year cycle. In 2022, salmon prices dropped dramatically and continued to drop further in 2023, where they remain today,” Kozlov said. “When the salmon season ended in August 2023 and the final salmon were processed, the Whittier Facility ceased operations and did not reopen for the 2024 season.”
The closure was part of a larger consolidation of Alaska’s seafood industry coming as a result of downturns in Alaska salmon and crab fisheries over the last several years. While Kozlov said he expects the U.S. government to provide Alaska’s salmon industry with a relief package as well as a broad recovery in salmon prices in 2025 as demand increases and supply remains low, he said he plans to file a joint reorganization plan soon that will include the sale of the Whittier plant and the company’s other assets.
The plan could be complicated, though, by ...
