Auction Block sale unlikely before summer fishing season

Feb 14, 2018


The sale of Auction Block, a large fish buyer and off-loader on the Homer Spit, was approved last month. Auction Block closed its doors late last year after it entered bankruptcy as part of a deal to sell the business to California-based Southwind Seafoods. But there may no longer be a buyer, and its doors remain closed as the summer fishing season approaches.

 

Southwind Seafoods offered about $2 million for Auction Block last year, and owner Kevin Hogan entered the business into Chapter 7 bankruptcy as part of the deal. According to court documents, most of the proceeds from the sale would have gone to Alaska Growth Capital, the largest creditor in the case and Southwind would of received the business free and clear.

Auction Block owes about $2.5 million total to various creditors.

The City of Homer is among those owed money, and it objected to the sale, arguing that Auction Block needs to pay the roughly $100,000 it owes to the city for crane and ice services before the sale went through.

Harbor Leasing, who is the primary leaseholder for the property and subleases it to Auction Block, also owes about $140,000 in back-rent to the city.

In its objection, city attorneys said that the city may evict Southwind from the property if the sale were to go through without Auction Block and Harbor Leasing’s debts being paid.

The city was the only creditor that objected to the sale.

Last month, Judge Frederick Corbit, approved the sale to Southwind or any other potential buyer, but said the sale would need to take place before the end of 2018.

It’s unclear whether Southwind is still interested in acquiring Auction Block. Southwind or Auction Block have not filed any documents in court indicating the sale is still on table.

 

KBBI reached out to Southwind, but did not receive a response in time for this story. Auction Block also declined to comment.

As part of the court order, the city must approve any sale that takes place, and a portion of the proceeds must go towards Auction Block’s debt.

The Homer City Council addressed Auction Block and Harbor Leasing’s lease during executive session Monday, but discussions in executive session typically remain private.

Brad Faulkner, owner of Alaska Custom Seafoods, did comment on the subject after the councils’ discussion. Faulkner said the city’s objection prevented the deal from going through and will lower prices on Homer’s fish dock, which are typically higher than other communities due to its competitive market.

“The price won’t reflect open competition and that’s what we’ve always had on the Homer dock,” Faulkner said. “So, if you really threw out the baby with the bathwater on this one in order to do $100,000 on your unsecured bankruptcy and threw out a good buyer that was coming to town out with it, the fishermen are going to lose.”

City Manager Katie Koester could not to be reached in time for this story, and it’s unclear what direction the city will take going forward or whether it would be willing to take a partial payment if a sale goes through.