Adak Fisheries Sale Order

Cabot Christianson, Esq.
CHRISTIANSON & SPRAKER

911 W. 8th Avenue, Suite 201
Anchorage, Alaska 99501
(907) 258-6016
Attorneys for Debtor
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF ALASKA
In Re: )
)
ADAK FISHERIES, LLC, )
an Alaska limited liability company, ) Case No. 09-00623 DMD
)
Debtor. ) Chapter 11
________________________________________________)
ORDER GRANTING
DEBTOR’S APPLICATION TO SELL ADAK PLANT
FREE AND CLEAR OF LIENS
At Docket No. 104, Debtor Adak Fisheries, LLC, (Debtor) applied to this
911 WEST 8TH AVENUE, #201 C ANCHORAGE, ALASKA 99501
Court for authority to sell to Adak Seafood, LLC, (Buyer), a Delaware limited liability
company, the Debtor’s plant facility at Adak, Alaska, and associated equipment and
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assets, for $488,000 cash to the bankruptcy estate plus assumption of approximately $6.7
million of debt owed to Independence Bank (the “Bank”), on the terms and conditions set
forth in the Asset Purchase Agreement (APA) attached hereto as Exhibit A, as modified
as set forth in the application. A hearing on the Debtor’s application was held November
9 and 10, 2009, and was noticed as set forth in the affidavits of service on file. Good
cause appearing,
IT IS HEREBY ORDERED that
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1. The sale to Buyer is approved on the terms set forth in Exhibit A
hereto, subject to the provisions of this order.
2. The vessel Eskimo Princess, currently titled in T&S Fisheries LLC, are
included in the assets being sold.
3. The Debtor hereby withdraws its motion to reject that certain lease, and
associated agreements, with Aleut Enterprise, Inc. (hereafter, Aleut Lease), with
prejudice, which said motion is dated September 17, 2009 (Docket No. 34).
4. The Debtor hereby transfers, conveys and/or assigns to Buyer any and
all of the Debtor’s interest in the Aleut Lease to Buyer, subject to that certain pending
adversary proceeding, including without limitation any and all claims, causes of action
and/or defenses set forth or advanced therein, which said adversary proceeding is now
commonly known and identified as Independence Bank v. Adak Fisheries, LLC, et al.,
Adversary Proceeding No. 09-90031. This transfer is not an assumption and assignment
of the lease and associated agreements under Section 365.

(907) 258-6016 C Fax (907) 258-2026
5. At Closing, the Buyer shall remit to Aleut Enterprise, LLC., the total
sum of $250,000.00. $138,108.16 of such sum represents the minimum annual rent due
Aleut Enterprise, LLC under the Aleut Lease for the 2009 calendar year. The balance of
this sum, i.e. $111,891.84, represents payment for property damage. This $250,000
satisfies in full the Aleut motion to compel payment of administrative rent at Docket No.
141.
6. In further consideration of the foregoing, at Closing the Buyer shall
escrow the total amount of $150,000, which said amount represents six (6) months of the
minimum annual rent due Aleut Enterprise, Inc. under the Aleut Lease for the 2010
calendar year.
7. In further consideration of the foregoing, Buyer shall defend and
indemnify the bankruptcy estate from any claim by Aleut Enterprise, LLC on account of
post-petition obligations arising under the Aleut Lease.
8. None of the foregoing payments to Aleut Enterprise, LLC, or other
provisions of this Order concerning the rights and liabilities of Aleut Enterprise, LLC,
with respect to the Aleut Lease shall be a deemed a waiver of any claim, right, defense or
position taken or asserted by Aleut Enterprise, LLC against any party, nor deemed an
adjudication of any substantive or procedural or other right, claim or liability of Aleut
Enterprise, LLC with respect to the Aleut Lease.
9. The sale does not include cash deposits, except such cash as may be
held at Closing in accounts controlled by Independence Bank.
10. The sale price is $488,000 cash to the Debtor at Closing, plus
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assumption of the entire obligation (approximately $6.7 million) owed by Debtor to

Independence Bank at Closing.
11. Separate and apart from the foregoing sale price, Buyer shall pay
$13,000 to the City of Adak in full satisfaction of all sales tax obligation associated with
the sale.
12. The sale is free and clear of the claims, liens and and interests of all
entities other than Independence Bank who received notice of the Debtor’s application,
and other than creditors who hold security interests, perfected pursuant to AS 28.10.371
et seq in titled motor vehicles. The entities whose claims and liens do not attach to the
assets and property sold include, include but are not limited to: Internal Revenue
Service,1 State of Alaska,2 City of Adak,3 or Pentech Leasing, The claims, liens and
interests of those entities (but not of Independence Bank) shall attach to the proceeds to
the same extent and in the same order of priority as exist in the underlying property sold
to the Buyer. The transactions contemplated by the APA will not subject Buyer to any
liability with respect to the operation of Debtor’s business except as stated therein or
herein.
13. After the closing, Independence Bank shall have no claim or lien
against the Debtor, or be entitled to any other relief against the Debtor, save for such
declaratory relief as may be ordered in Adversary No. 09-90031
14. The automatic stay is hereby lifted with respect to the Aleut Lease.
This lifting of the automatic stay shall be without prejudice to the claims asserted in
Adversary 09-00031.
(907) 258-6016 C Fax (907) 258-2026
15. The security interests of Independence Bank against the Debtor’s

assets and property sold to Buyer shall continue, after closing, in those assets and
property pursuant to nonbankruptcy law.
1
Tax liens in the amount $3,102.20 recorded June 23, 2009; $9,466.47 recorded July 6,
2009; and $21,642.97 recorded August 24, 2009.
2
Tax liens in the amount $6,864.52 recorded July 27, 2009, and $11,650.00 recorded
April 14, 2009.
3
Tax lien in the amount $546,191.50 recorded April 23, 2009.
16. Debtor has demonstrated sound business purpose and justification,
and compelling circumstances, for the proposed sale pursuant to 11 U.S.C. Section
363(b) prior to, and outside, a plan of reorganization, in that (a) any sale of the plant must
close in time for the Buyer to prepare for the upcoming fishing season which commences
January, 2010, and there is insufficient time for the plant to be sold through a confirmed
plan of reorganization; (b) the only other offer or expression of interest in the plant is by
Trident Seafoods Corporation, which has expressed an interest in purchasing certain of
Debtor’s assets, and after adjustment for differences between Buyer’s offer and Trident’s
expression of interest, Buyer’s offer is millions of dollars higher; and (c) absent a sale to
the Buyer on the terms set forth herein, the assets will likely decline speedily in value,
and there is no prospect that the plant could be sold on terms more favorable to the
bankruptcy estate.
17. Debtor may sell its property and assets to Buyer on the terms set forth
herein, because (a) applicable nonbankruptcy law permits sale of such property and
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assets free and clear of the claims and interests set forth herein; (b) any entity who has
received notice of the Debtor’s application and who has not filed an objection to the
application is deemed to have consented; or (c) either such claims and interests are a lien
and the price at which such property is to be sold is greater than the aggregate value of all
liens on the property, or such claim and interest is in bona fide dispute.
18. Buyer is a good faith purchaser within the meaning of 11 U.S.C.
Section 363(m) and, as such, is entitled to all the protections afforded thereby. Buyer
will be acting in good faith within the meaning of Section 363(m) in closing the sale at
Exhibit A to Order Authorizing Sale
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Adak Fisheries Sale Order

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Cabot Christianson, Esq.

CHRISTIANSON & SPRAKER

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF ALASKA

IT IS HEREBY ORDERED that

hereto, subject to the provisions of this order.

included in the assets being sold.

of the lease and associated agreements under Section 365.

6. In further consideration of the foregoing, at Closing the Buyer shall

7. In further consideration of the foregoing, Buyer shall defend and

post-petition obligations arising under the Aleut Lease.

8. None of the foregoing payments to Aleut Enterprise, LLC, or other

adjudication of any substantive or procedural or other right, claim or liability of Aleut

Enterprise, LLC with respect to the Aleut Lease.

held at Closing in accounts controlled by Independence Bank.

assumption of the entire obligation (approximately $6.7 million) owed by Debtor to

Independence Bank at Closing.

declaratory relief as may be ordered in Adversary No. 09-90031

15. The security interests of Independence Bank against the Debtor’s

property pursuant to nonbankruptcy law.

Trident Seafoods Corporation, which has expressed an interest in purchasing certain of

18. Buyer is a good faith purchaser within the meaning of 11 U.S.C.

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