It’s The End of the Road for China Fishery Group Limited and Pacific Andes Resources Development Ltd

After years of struggling with their businesses and debt-laden balance sheets, China Fishery Group Limited (SGX: B0Z) and Pacific Andes Resources Development Ltd (SGX: P11), together with more than 14 affiliates, have filed for bankruptcy protection in the United States on Thursday.

Pacific Andes Resources is the parent company of China Fishery Group. The latter owns huge fishing and fish-processing businesses in Peru. In fact, China Fishery can be considered as one of the largest producers of fishmeal and fish oil in the world.

Although the company had generated sizeable revenue of US$488 million in the 12 months ended 28 June 2015, it has been facing extreme challenges in turning around its business (its profit of US$29.2 million in the 12 months ended 28 June 2015 is a big drop from the US$78 million seen in the fiscal year ended 28 September 2012) as well as severe financial difficulties. China Fishery has been trying to sell its Peruvian business for some time now, but has been unsuccessful.

Filing for Chapter 11 bankruptcy protection would prevent China Fishery’s bondholders and creditors from seizing the company’s assets until court proceedings happen at a later date. The bankruptcy filing does not affect China Fishery alone – it might have ripple effects for those involved with the company.

Creditors are one group that may be affected. Some of China Fishery’s largest creditors are banks in Hong Kong. But, DBS Group Holdings Ltd (SGX: D05) also has exposure to the bankruptcy filing as its Hong Kong branch is one of the largest unsecured creditors of China Fishery.

Given the lack of a buyer for China Fishery’s business and the presence of creditors who are eager to recover some of their capital, everyone that’s involved in the whole saga might end up badly bruised after the dust clears.

But there’s one thing that seems certain. Although China Fishery and Pacific Andes Resources have a collective market capitalisation of S$200 million at the date of their trading suspensions (shares of China Fishery and Pacific Andes Resources have both been suspended from trading since November 2015), shareholders of both companies would most likely walk away with nothing when all’s said and done.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn't own shares in any company mentioned.