Solberg: 'I lost everything'

Kjetil Solberg, the founder and former owner of defunct processor Adak Fisheries, has answered a bankruptcy trustee's lawsuit seeking the return of $400,000.

Filing the papers himself without an attorney, Solberg says he's no longer an Adak resident and lists his current station as Panama City, Panama.

He acknowledges a money transfer "to settle my divorce."

But Solberg contends it was money he was due.

"I did nothing wrong, and the value of time and money I invested in the company was far more than I took out over time," Solberg's answer says.

Read the full document here.

Bankruptcy trustee says Solberg owes $400,000

As previously reported here, Aleut Enterprise is suing to try to evict an unwanted tenant from the seafood processing plant on Adak Island.

Last week, Aleut filed this 17-page memo arguing that, hey, the tenant at least needs to pay rent while the court case plays out.

The real nugget of the memo, however, is the mention of a separate lawsuit previously unknown to Deckboss.

The Aleut memo says the lawsuit levels "troubling ... allegations of self-dealing and fraud" against Kjetil Solberg, the founder and former owner of Adak Fisheries, which filed for bankruptcy last September.

Kenneth Battley, the court-appointed trustee for Adak Fisheries, brought the suit in April.

Just today, Battley asked the judge to declare Solberg in default for failure to answer the lawsuit.

Battley wants Solberg to pay back $400,000 to the Adak Fisheries estate.

The suit says Solberg, or parties on his behalf, received money transfers that were executed too near the time the company filed for bankruptcy.

For example, Adak Fisheries made a $26,425.71 mortgage payment on a piece of property Solberg owns, the Battley suit says.

Another time, checks for $100,000 and $15,838 went to "Ricky Solberg, Mr. Solberg's wife or ex-wife," for "property settlement, credit card payments and child support."

The Aleut Enterprise memo offers further detail, saying: "The trustee has alleged that Mr. Solberg utilized company funds to pay for personal travel, mortgage payments on a recreational property in Halibut Cove, and alimony payments, among other things."

Solberg is now an owner in a new company, Adak Seafood, the successor to Adak Fisheries.

It is Adak Seafood, of course, that landlord Aleut Enterprise aims to evict, arguing the company lacks a valid lease.

The battle for Adak continues

When last we visited the subject of the Adak fish plant, a U.S. Bankruptcy Court judge in Anchorage had just approved a sale of the operation to an outfit called Adak Seafood.

So, end of story, right? Adak Seafood starts processing lots of fine Aleutian Islands fish and crab and that's that.

Well, hold onto your codfish.

The landlord out on Adak Island, Aleut Enterprise, last week hit Adak Seafood with a "notice to quit," which I've posted here.

The notice advised Adak Seafood it had no right to occupy the property and further, the existing lease would expire at the end of December. The company was told to clear out right away or face "a civil action to remove you from the premises."

Aleut Enterprise President Rudy Tsukada signed the notice.

That Aleut would present the notice is no surprise considering the lawsuit that's been raging alongside the bankruptcy case that led to the processor's sale.

The side suit, known in bankruptcy parlance as an adversary proceeding, was brought by Independence Bank of Rhode Island, which is trying to salvage nearly $7 million in loans it made to what heretofore was known as the Adak Fisheries plant and its founder and former owner, Kjetil Solberg.

Solberg, as we've reported previously here on Deckboss, is involved with the new owner, Adak Seafood. We also reported there's bad blood between Aleut and Solberg.

Anyway, Independence is in Adak Seafood's corner, arguing the lease actually should still be in force. Not insignificantly to Independence, Adak Seafood agreed to assume the outstanding loans as part of its purchase.

Lawyers for the bank further allege the existence of a "nexus" between Aleut, John Young and Trident Seafoods Corp.

Trident, you'll recall, made an unsuccessful bid for the Adak plant, not agreeing to assume the loans. As for Young, he's a Seattle attorney who took ownership of Adak Fisheries last summer and signed it into Chapter 11 bankruptcy on Sept. 11.

The bank's lawyers contend Young, Aleut and others "engaged in a concerted scheme" to either terminate the lease or let it expire rather than exercise an option to renew it.

Young argues Independence Bank lacks sufficient facts to back up the notion of any scheme.

Yes, dear readers, the whole affair seems rather complex, doesn't it? And believe me, I'm leaving out many details for lack of post-holiday energy.

Bottom line is the fate of the Adak plant is far from settled, with the scram notice coming just as cod season opens.

It gets worse.

Turns out our government, specifically the U.S. Department of Agriculture, guaranteed portions of those Independence Bank loans.

Sold!

Lawyers yesterday worked out a sale of troubled processor Adak Fisheries to a newly formed Norwegian-backed concern called Adak Seafood LLC.

Here's the order signed by U.S. Bankruptcy Judge Donald MacDonald.

Adak Seafood got the plant on Adak Island, way down the Aleutian chain beyond Dutch Harbor, for $488,000 in cash plus assumption of $6.7 million in loans from Independence Bank of Rhode Island.

The sale price "is millions of dollars higher" than a competing bid from Trident Seafoods Corp., the judge's order notes. Trident didn't offer to take on the bank debt.

It appears the key to the deal was the pledge of certain sums to satisfy Aleut Enterprise, the processor's landlord on Adak.

The order says the sale should clear the way for the plant to open in time for the lucrative Pacific cod season in January.

That would be a good scenario for the young community of Adak, which is counting on its only fish plant to help to convert the former Cold War military outpost into a viable civilian town.

But never mind the island's future. Deckboss just wonders how long it'll take Kjetil Solberg to turn up again at Adak.

The latest on Adak Fisheries

Again this morning, Deckboss trudged through new snow to the bankruptcy court in Anchorge to check out continued proceedings in the case of Adak Fisheries.

So far today, the result has been the same as yesterday: No action on a sale of the faraway fish plant.

If anything, a sale sounds less likely than it did a couple of days ago.

"We are losing momentum, judge," Cabot Christianson, the lawyer for Adak Fisheries, told Bankruptcy Judge Donald MacDonald. "We are losing momentum on the deal."

Presumably, the deal to which Christianson refers is the offer from a Norwegian concern for $488,000 in cash plus assumption of $6.7 million in bank debt on the plant.

Aleut Enterprise, landlord for Adak Fisheries on Adak Island, doesn't like the offer because Kjetil Solberg, which whom Aleut has jousted over the years, might somehow be involved with the buyer.

A competing offer of $2 million in cash is on the table from Seattle-based Trident Seafoods Corp.

The bank that holds the debt on the Adak plant, we assume, doesn't care for the Trident offer.

The numerous lawyers involved in the knotty case are expected to convene again at 2 p.m. at the courthouse.

Trident reveals Adak interest

Trident Seafoods Corp. is offering $2 million in cash for the assets of Adak Fisheries.

Seattle-based Trident, in a filing yesterday in U.S. Bankruptcy Court in Anchorage, said it would like to reopen the plant on far-flung Adak Island in early 2010.

The plant is known mainly as a cod processor, but Trident indicates it might process pollock there, too.

As we've previously noted here on Deckboss, however, Trident is not alone in pursuing the plant.

An outfit called Adak Seafood purportedly is offering $488,000 in cash plus assumption of $6.7 million in bank debt.

In papers filed this week in the bankruptcy court, Aleut Enterprise, landlord for Adak Fisheries, opposes the sale to Adak Seafood in part because the processor's former owner, Kjetil Solberg, appears to be involved with the prospective buyer.

Aleut Enterprise said it "does not believe that Mr. Solberg or any company in which he is involved can provide adequate assurance of future performance, based on past performance issues."

The whole affair is set for a big hearing in the Anchorage bankruptcy court starting at 9 a.m. Monday.

Deckboss just might amble down there and check it out.

Kjetil Solberg — Adak survivor

Here's an update on the bankruptcy case of Adak Fisheries LLC, the company that owns the lone fish processing plant on faraway Adak Island in the Aleutian chain.

It seems the debtor now agrees with the company's main creditor, Independence Bank, that the plant and its equipment should be sold to an outfit called Adak Seafood LLC.

This sale motion the lawyer for Adak Fisheries filed indicates the buyer would pay $488,000 in cash, and would also assume the $6.7 million in debt owed to Independence Bank.

We learn a lot of other very interesting things from this and other documents filed in recent days in U.S. Bankruptcy Court in Anchorage. To wit:

• Adak Seafood LLC was incorporated in Delaware on Sept. 4 and, as Deckboss reported on Sept. 29, is affiliated with Norwegian seafood company Drevik International. The court papers say Drevik was a major Adak Fisheries customer, and that "a group of Norwegian investors" is behind Adak Seafood.

• None other than Kjetil Solberg, who founded the Adak processor in 1998 but no longer owns it, "has a relationship to" the potential buyer, Adak Seafood. Solberg "would be involved in the operation of the plant if the purchase was successful," and in fact "may be in complete charge of the buyer's new operation," the sale motion says.

This would be a fairly amazing feat for Solberg, who has lost control of the Adak plant before, only to rally back. In 2005, for instance, during a dispute with a former partner and the plant's landlord, a judge barred Solberg from the property, the doors of which were actually padlocked for a time.

• The lawyer representing Adak Fisheries in the bankruptcy case writes in the sale motion that while Adak Seafood has made the only formal offer for the plant, the debtor "believes that there may be another offer coming, from Trident Seafoods."

The whole affair could reach a climax on Nov. 9, when a hearing is scheduled to consider the sale motion.

Adak's power struggle

Deckboss simply doesn't have the energy tonight to recap the long and tumultuous history of Adak Fisheries, the little fish plant on faraway Adak Island in the Aleutians.

He can only report the latest drama surrounding the operation.

It seems a flurry of lawsuits have been filed against Adak Fisheries in recent weeks.

One suit involves the local electric utility, TDX Adak Generating, suing for unpaid power bills. More on this case in a minute.

Another case has Coastal Transportation Inc. suing for $56,520 in unpaid bills for shipping everything from boots and rain gear to pallets of salt. Court records show a default judgment already has been entered against Adak Fisheries for failure to answer the lawsuit.

Toyota Motor Credit Corp. and Daimler Chrysler Financial Services also have sued Adak Fisheries, but I wasn't able to get a look at those case files today.

The major suit seems to be the TDX action against Adak Fisheries and owners Kjetil Solberg, Matthew Tisher and Dave Fraser.

Evidently, the Adak Fisheries folks and TDX have been in a power struggle for some time over the processor's electric bills. The fish plant is among the largest power users on Adak, which until recent years was strictly a military outpost.

My read of the lawsuit is that TDX is aiming to collect potentially more than $1 million in unpaid bills and damages for "intentionally tampering" with an electric meter to show the plant used way less juice than it actually did.

The lawsuit includes an affidavit from Adak Police Chief James Northcott, who says he also has worked as an electrician for the city as well as TDX and Adak Fisheries.

Northcott's statement says Adak Fisheries employees including Fraser met with Adak's mayor and others at city hall toward the end of last year. They expressed concern about the size of the processor's electric bill and the accuracy of a meter Northcott had installed in the fish plant in 2007.

At the time of the city hall meeting, the city owned the local electric utility. TDX took it over in December 2008.

Northcott, in his statement, says city officials agreed to install a replacement meter.

"When the meter arrived in late November 2008, Dave Fraser intercepted the meter shipment at the Alaska Airlines freight office in Adak, took the new meter to the fish plant, and directed Adak Fisheries' electrician, Saldie, to install the new meter," Northcott's affidavit says. "All of this was done without my approval. I told Dave Fraser that he had no authority to make the change, and that I was the only one authorized by the City to change out meters. In fact, I got into an argument with Dave Fraser over the entire matter."

The TDX lawsuit contends the new meter was wired in such a way as to show only a third of actual electrical usage.

The suit also says that after some failed negotiations, TDX disconnected the fish processor's main commercial account on April 8.

Adak Fisheries and the owners haven't yet answered the TDX lawsuit, which was filed July 13 in Superior Court in Anchorage.

Of course, Deckboss would be pleased to report the other side of the story and invites Solberg and Fraser to respond to this post.