Protect Your Catch: Maritime Liens for Alaskan Fishermen
Feb 1, 2024
Fishing in Flux: Assessing the Alaskan Seafood Industry’s Instability
In the past six months, the Alaskan seafood industry has experienced unprecedented volatility and uncertainty. Seafood processors in the United States are facing fierce competition from the global market, and this has left some processors in a precarious position.
Recently, Trident Seafoods, one of the largest seafood processors in the United States, shut down four large processing plants in Alaska. Another Northwest processor juggernaut, Peter Pan Seafoods, closed its processing facility in King Cove, which has been operating since the early 1900s. Even Larsen Mettler, the managing director of S2G Ventures and a well-respected venture capitalist in the seafood industry, appears to be pessimistic about the Alaska seafood industry.
This market volatility places Alaskan fishermen (particularly vessel owners) in a difficult financial position. One of the biggest concerns these vessel owners have is whether they will get paid for the fish they sell to the processors. Similar uncertainties loom with tender operators who, like fishermen, go months before being compensated for their deliveries.
Considering these uncertainties, it is vital for vessel owners to be proactive while remaining mindful of their relationship with the processors. If vessel owners push too hard, they could jeopardize their long-term relationship with these processors, which is a non-starter for most of the vessel-owning fishermen operating in Alaska.
The question, then, is how can these entities, with crew, fuel, and insurance costs of their own, protect themselves in the event one of these larger seafood processors goes belly up?
One solution is to file a lien against the processor.
Establishing a Lien: A Fisherman’s Right to Payment
Think of a lien as a form of insurance for your payment. It’s a legal claim against property—like a vessel or seafood processor’s assets—to ensure you’re paid for the fish you’ve sold. It’s your backup plan that stands guard, ensuring you have a rightful place in line for payment in the worse-case scenario: processor bankruptcy.
The crucial value of a lien is that it may serve as a source of payment for a debt in and of itself, or it may serve as a source of motivation for a debtor to pay a debt to avoid loss of the property subject to the lien.
The most important aspect of a lien is that it essentially reserves a spot in line. If the processor was to go out of business and file for bankruptcy, the lien would put you on the list of creditors to be paid from any remaining funds. Different liens have different priority, and higher priority means that you would be higher on the list.
Understanding the Fishermen’s Lien
Under Alaska law, there are two liens that a fisherman could potentially file. One is a fishermen’s lien against the processor under Alaska Statute (AS) § 34.35.391, which reads as follows:
(a) A person who sells fish to a fish processor as defined in AS 16.10.296, or to a primary fish buyer as defined in AS 16.10.296, or to a cooperative corporation organized under AS 10.15, and receives a fish ticket or a record of purchase as described in AS 16.05.690 has a lien upon the property of the fish processor, primary fish buyer, or cooperative corporation for the value of the fish.
(b) A person who claims the benefit of this section shall, within 90 days of the date the fish are sold, record a claim of lien in the recorder’s office of the recording district where the fish were sold.
(c) The lien provided in this section is preferred, prior, and superior to a mortgage, attachment, claim, or demand made or recorded in the recording district in which the property is located after the date on which the fish are delivered to the buyer of the fish.
For example, if a fisherman sells fish to a processor and doesn’t get paid, the fisherman can file a lien for the debt. The fisherman has a legal claim against the property of the processor. The fisherman can pursue that claim in court, along with any other claims that might be applicable under the circumstances. A fisherman’s lien must be recorded through the Alaska Department of Natural Resources Recorder’s Office in the recording district where the fish were sold.1
Navigating the Packer’s and Processor’s Lien
Another option is a packer’s and processor’s lien against the processor under Alaska Statute (AS) § 34.35.320, which reads, in part, as follows:
(a) A person who contributes to the preparation of fish or aquatic animals for food, fish, meal, fertilizer, oil, or other article of commerce by furnishing material or labor for it has a lien for the value of the labor and material upon (1) the product or output of the cannery, saltery, or other plant or establishment, for which material or labor was furnished; and (2) the plant or establishment itself, including the houses, wharves, machinery, and equipment of the plant or establishment, for the value of labor and material.
For example, if a packer provides labor or materials to a processor and doesn’t get paid, the packer can file a lien for the value of the labor or materials they provide. The packer has a legal claim against the product or output of the processing plant and even the plant itself. The packer can pursue that claim in court, along with any other claims that might be applicable under the circumstances. A packer’s and processor’s lien must be recorded through the Alaska Departmentof Natural Resources Recorder’s Office in the recording district where the product or output of the processing plant is located or the plant itself is located. 2
Essentially, “[u]nder Alaska law, fisherman have statutory liens in all property of the processor, while packers have statutory liens in the fish product or output of the processing plant for which material or labor was furnished, and the plant itself, for the value of labor and material.” 3
Timing Your Lien Filings for Maximum Protection
Filing the two liens is a similar process and generally requires the same information, but there are some key differences.
- The Fishermen’s Lien must be filed within 90 days of the date the fish are sold.
- The Packer’s and Processor’s Lien must also be filed within 90 days after the completion of the work; however, a claim can only be filed for service, work, or material furnished within six months before the date of recording.
Additionally, a Packer’s and Processor’s Lien only binds the property for six months after the lien is recorded unless a lawsuit is brought to enforce the lien. Nevertheless, filing a claim for a lien is a simple first step, and it is vital to ensure protection in the event it is necessary. Removing the lien if payment is made after filing is equally simple – the claimant need only release the lien.
The Power of Priority in Getting Paid
Liens can have many benefits, including:
- Legal Leverage: It can prompt quicker payment from a processor that wants to avoid complications.
- Priority Payment: When funds are scarce and many are waiting for payment, your lien can put you at the front of the line.
- Financial Security: A lien can be more cost-effective than litigation, saving you time and money.
In addition to serving as a source of or motivation for payment, a lien establishes priority. Priority is one of the biggest perks to filing a claim for a lien. When funds are limited and claims are extensive, high priority means that a fisherman will get paid before other claimants. Without a claim for a lien, the only other option to recoup funds is to file a lawsuit for breach of contract and/or other related claims, which would be a much more expensive option with a smaller chance of success.
Priority of liens in general can vary depending on a few factors, most of which would be established during the foreclosure process. Fisherman’s liens and packer’s and processor’s liens, however, generally have high priority. For example, in a 2010 case, the processor went bankrupt and left over $16 million in unpaid claims.4 After the sale of the debtor’s assets, the bankruptcy estate received only $488,000 in proceeds.5 After a settlement with a third party, the bankruptcy estate received an additional $117,250.20.6
Among the claimants were a fisherman, who claimed a fisherman’s lien for fish sold to the processor, and the City of Adak, which claimed a tax lien for failure to pay city taxes.7 Although the unpaid claims totaled over $16 million, there were very limited funds available in the bankruptcy estate to pay them. After analyzing the relevant statutes, the court determined that even though the City of Adak filed its lien before the fisherman, the fisherman’s lien took priority because “the City’s tax lien was recorded after [the fisherman] delivered fish to the debtor and received fish tickets for their delivery.”8 The Court found that “fishermen’s liens are superior to the City’s tax liens” under Alaska law.9
Taking Action: Enforcing Liens for Payment Security
Under Alaska law, a lienholder must bring an action to enforce the lien or the lien may become invalid. This action is called foreclosing on the lien, similar to foreclosing on a mortgage. The court will issue a judgment against the property owner, and the lien holder must then pursue collection on the judgment. In addition to the amount of the lien itself, Alaska Statute (AS) § 34.35.005 provides that courts will allow the lienholder to recoup from the property holder all costs for drawing, filing, and recording the lien claim, as well as reasonable attorneys’ fees for the foreclosure of the lien.
Furthermore, an action to enforce a fishermen’s lien or a packer’s and processor’s lien will have preference on the court’s calendar, which means that it will be tried without unnecessary delay.10 For reference, other civil actions, such as breach of contract, can take years to litigate. Considering the delays that civil litigation can face, priority on the court’s calendar is yet another advantage to filing a lien.
Filing a lien is a straightforward process, and it may be enough to motivate a property owner to pay their bill. If not, enforcement is the next step, and our firm is prepared to assist you throughout the process.
Final Thoughts: Ensuring Payment in Uncertain Times
The Alaskan seafood industry faces significant uncertainty, but Alaskan fishermen are not without options for protecting their income. By utilizing maritime liens, you can secure the payment you deserve for the seafood you’ve worked hard to provide.
Our legal experts are here to assist you with filing or enforcing a lien to safeguard your financial interests. Remember, there are strict deadlines for these legal actions, so it’s critical to act promptly.
In the end, having a lien could make all the difference—being prepared is always better than being caught off guard.
Ready to take action? Get in touch with us now to set up a consultation and ensure your financial protection.
1 See https://dnr.alaska.gov/ssd/recoff/
2 See https://dnr.alaska.gov/ssd/recoff/
3 In re King Fischer Fisheries, 2005 WL 6960221 at *2 (B.A.P. 9th Cir. 2005)
4 In re Adak Fisheries, 459 B.R. 731, 733 (Bankr. D. Ala. 2010)
8 Id. at 738.
10 AS § 34.35.005(c)
About the author
Isaak’s current list of clients includes shipowners, charterers, shipyards, seafood companies, importers, exporters, freight forwarders, carriers, offshore oil and gas companies, mining companies, construction companies, and other entities and persons engaged in the maritime and transportation industry.