In October 2023, wrecking crews finished scrapping the last of a dozen fishing boats that had once owned by the notorious New England fishing magnate nicknamed “The Codfather.” Carlos Rafael, who started out as a fish gutter in New Bedford, Massachusetts, aggressively worked — and sometimes cheated — his way up the ladder, eventually coming to dominate New England’s groundfish fishery (which includes cod, hake, flounder and other white fish) before a 2017 court decision sent him to prison for nearly four years and forced him to sell off his fleet. The sale, completed during his prison sentence, would earn him another $100 million. It was a profitable end for a fishing empire built on seafood fraud, tax evasion and consolidation.
So when the private equity-backed Blue Harvest Fisheries announced in 2020 that it was buying most of Rafael’s fleet and putting the boats back to work, some welcomed it as good news for the port of New Bedford, the hub of Cape Cod’s fishing industry. But others were alarmed that Blue Harvest’s majority equity holder was the Dutch-owned firm Bregal Partners — and that most of the money would ultimately move through a Swiss holding company and into the hands of a family of European billionaires, with only a tiny fraction going to the local fishing community. Now, only three years after assuming control and becoming the dominant player in the New England groundfish fishery, Blue Harvest has suspended its operations and filed for Chapter 7 bankruptcy, leaving many fishermen unemployed once again.
In filing for Chapter 7, Blue Harvest may be leaving as much as $100 million in outstanding debts — many of them to local vendors who performed maintenance and upgrades on its fleet. An investigation by the New Bedford Light has found that the bankruptcy is likely an avenue for Bregal to avoid paying those debts and maximize the cash it could extract.
Also among the unpaid creditors are fishermen themselves, who were never fairly compensated even when Blue Harvest was still solvent. From the beginning, Blue Harvest’s CEO was transparent that the goal for the company was vertical integration, something it did very well. The company delivered as much money as possible to Bregal and other backers with minimal losses: Fishermen were expected to shoulder most of its operating costs as independent contractors, with Blue Harvest charging them for the fuel, maintenance, gear and even permits. For crew members, this meant earning as little as 7 cents per pound of fish.
Blue Harvest’s rise and fall is the result of a fisheries management structure called catch shares, which had initially attracted endorsements in the 1990s from economists and conservation groups as way to avoid overfishing and other problems in high-value, high-demand fisheries like groundfish, Alaskan king crab or red snapper. Other strategies for avoiding overfishing — for instance, limiting a fishing season to a short window — created unintended consequences, like a dangerous annual “race for fish” that sometimes left fishermen dead, fishing gear at sea and endangered species caught up in loose nets, all in an attempt to catch as much as possible. But if the total allowable catch (as determined by a fishery management council run by the National Oceanic and Atmospheric Administration) could be portioned into sellable “catch shares,” also known as individual transferable quotas, economists reasoned fishermen would treat their share like an investment: taking a personal stake in the health of the fish stock while avoiding some of the desperate frenzy that other management strategies seemed to induce.
Unfortunately, those shares became even more like investments than fisheries managers had hoped, becoming more valuable as assets to be bought and sold than they were as a way to encourage responsible fishing. Because the shares were tradeable, anyone could swoop in and buy them — a problem made worse by the absent (or overly lenient) caps on share ownership in most fisheries where NOAA implemented catch share programs. And because the initial shares (as portioned out by NOAA) were allocated based on historical fish catches, larger operations started out with more of the catch, leaving smaller fishermen with few shares and kicking many out entirely.
As a market around the shares developed, many small fishermen found they couldn’t turn a profit with too few shares, but that it was also impossible to buy more — prompting them to sell off their shares to wealthier fishermen or fishing companies. Some would keep fishing, leasing shares or signing on as poorly compensated contractors for companies like Blue Harvest, but many more sold their boats and left fishing entirely.
It became apparent that share owners could shift most of the costs of fishing onto fishermen without shares, buying up catch shares then essentially charging those who didn’t have the capital to participate in the system themselves for access. Catch shares emerged as a lucrative, low-risk investment with a high capital barrier — the perfect target for private equity firms like Bregal.
So what went wrong? When they entered the market in 2015, Blue Harvest’s goal was dominating the scallop industry: It bought shares equivalent to 5% of the catch, the maximum permitted and lobbied regulators to allow them to lease additional shares from other shareholders. This incited strong pushback from fishermen, who had seen the effects of ongoing consolidation in other fisheries — especially New England groundfish, where the more generous share cap (15.5%) and unrestricted leasing meant that companies like Blue Harvest could dominate even more of the market.
When Blue Harvest’s bid to allow leasing in scallop shares was defeated in 2022, limiting the potential for further growth in the scallop market, the company started to divest, selling off its 15 scallop boats. In early 2023, Blue Harvest suspended operations at its seafood processing plant in New Bedford, laying off more than 60 employees, to go all-in on groundfishing — a lucrative market, and the reason it had purchased Rafael’s fleet three years earlier.
Those changes portended bigger problems: Industry experts say the company was becoming too top-heavy to function, with oversized executive salaries and too much investment in new boats, which it had hoped would make operations more efficient and profitable in the long run. Those new boats also cast doubt on the purported ecological benefits of catch shares, as the larger vessels contributed to overfishing of haddock and other species. In response, the fishery managers lowered the catch limits, hurting anyone else who depended on the fishery too.
The collapse of Blue Harvest illustrates that, while it’s now easier for non-fishermen to take over a fishery, they’re not always well equipped to run a fishing outfit. Of course, private equity firms are more interested in good returns than stable businesses. The Blue Harvest story is a classic example of “asset stripping,” wherein private equity manages to turn a profit on the death of a company by moving its assets beyond legal reach.
In light of the hundreds of jobs lost and millions in unpaid debts that Blue Harvest is leaving behind, advocates for independent, non-corporate fishermen, including the North American Marine Alliance, have demanded a moratorium on new catch share programs. Coupled with stricter regulations on existing programs — like imposing leasing restrictions and strict ownership caps, which would prevent individual companies from gaining so much control in the first place — banning the model from spreading further could help limit future consolidation in fishing communities around the United States.
Changes like these can’t reverse the damage that’s already been done: Much like with farms, once a fishing business is lost, today’s financial barriers make it nearly impossible to restart it, especially when catch shares are required to fish. That means that, for many New Bedford families, fishing has become a family legacy, not a livelihood. But by demonstrating that catch shares — at least as they’ve been implemented so far — are a failure for fishermen, the collapse of Blue Harvest may still prove an actionable lesson for policymakers as they weigh how to best preserve both resources and communities.