A Chilean court in the southern city of Punta Arenas has accepted an appeal filed by salmon-farming firm Nova Austral to reorganize its operations, striking down a previous court resolution that had declared the company bankrupt.
The ruling will allow Nova Austral to advance with its reorganization process.
Nova Austral Union Secretary Rodrigo Valencia expressed relief following the ruling, saying it would save 540 jobs.
“The terms of the reorganization are for 10 years … having cash flow, fish in the water, production, and farming centers. We’ll have work in Porvenir [where Nova Austral is based] and Punta Arenas,” he told ITV Patagonia. “This reorganization has been going on for more than a year. We began in July 2023, plus all that the union did before that in speaking with the government. The situation has ended well, and the original ruling was struck down … From here on, we can begin a new process with Nova Austral.”
Now that the ruling has been finalized, Valencia said the company’s current capacity of 12,000 metric tons of production is now expected to progressively increase.
On 14 May, Judge Pablo Aceituno of the Court of First Guarantee of Porvenir issued a resolution to liquidate Nova Austral, based on complaints presented by two of the salmon farmer’s creditors – Nutreco and Salmonera Dalcahue Limitada – which alleged unequal and illegal treatment in the financial reorganization process Nova Austral approved in January 2024.
They alleged Nova Austral had arbitrarily favored some creditors, excluding them from key benefits within the reorganization agreement.
However, in its latest ruling, the Punta Arenas Court of Appeals found that proof of such treatment was lacking. Rather, the court found the differences established in the agreement are not arbitrary but justified under existing regulations which allow for more favorable conditions for certain creditors as long as there is an agreement with the required quorum.
Nova Austal’s reorganization aims to ensure operational continuity for the firm, which has faced numerous fines from the Chilean government for environmental infractions. The company has said that its performance has been affected by a series of factors that have prevented it from performing its normal business, particularly steep environmental sanctions.
Specifically, Nova Austral came under investigation in 2019 from Chile’s National Fisheries and Aquaculture Service (Sernapesca) for underreporting mortalities – an infraction which led to criminal charges and fines. It has been in regulatory hot water and financial straits since then.
In April 2024, a Chilean court of appeals confirmed the salmon farmer must pay a fine of CLP 1.02 billion (USD 1.06 million, EUR 992,000) for other environmental infractions.
The three largest creditors of Nova Austral – reportedly more than USD 550 million (EUR 516 million) in debt – are Nordic Trustee, which has invested USD 415 million (EUR 389 million) in the company, followed by DNB Bank at USD 69 million (EUR 64.7 million) and Skretting at USD 23 million (EUR 21.6 million).
Nova Austral posted a net profit of USD 400,000 (EUR 370,000) in the first quarter of 2024, putting an end to several consecutive quarters of losses, including a USD 43.2 million (EUR 40 million) loss posted in the first three months of 2023.
It has not yet reported Q2 2024 results.
