The reputation of the entire UK fishing industry could be damaged by the collapse of British Seafood, trade sources have claimed.
British Seafood went into administration earlier this month after trade credit for the heavily leveraged company was withdrawn, and senior industry sources believe the sudden collapse of the £324m group may have a knock-on effect on the rest of the industry.
"It's not good for the seafood industry, because of the size of British Seafood and its name," said one processor. "The whole industry could be tainted and banks may think twice about offering credit to other seafood companies."
Industry authority Seafish said it hoped credit insurers would understand that British Seafood had particular issues unrelated to the rest of the industry.
"Our concern is that the banking industry and regulators should recognise that the UK seafood industry and its supply chain is full of sound, responsibly managed businesses with excellent credit records," said chief executive John Rutherford.
Administrator Deloitte this week confirmed that another British Seafood subsidiary, Five Star Fish, had also gone into administration as a knock-on effect of its parent's situation. However, it was confident that a sale could be achieved relatively quickly.
Analysts have said there is likely to be interest from private investors in buying up the rest of British Seafood's portfolio. "It's a substantial presence in the fresh fish market," said Shore Capital analyst Clive Black. "I'd imagine there would be plenty of interest but it sounds like there's quite a bit of sorting out to do before the next stage in its development."
It is still unclear what will happen to the ongoing court case between British Seafood and Seafish. The processor last month launched an appeal after it lost a claim against Seafish for at least £2m of levy funds it says it should not have had to pay. A decision on the appeal is understood to be pending.
British Seafood: as debts go overboard, so do answers (6 March 2010)
British Seafood Group falls victim to trade credit woes (27 February 2010)