Frigid weather in Chesapeake Bay country has caused a major clam-processing firm here to file a voluntary Chapter XI bankruptcy in U.S. District Court at Baltimore.
Hanks Seafood Co., and a subsidiary succumbed to a cash flow crisis when ice halted normal clamming operations in the bay and off the Atlantic coasts of Maryland, Virginia and New Jersey.
"We weren't prepared for a long siege like this," said the company's chairman and founder, Fletcher Hanks, a pioneer in commercial development of the soft-shell clam business. In 1954, he won, a patent for a dredge that made large-scale harvesting possible.
With boats unable to opearte in recent weeks, the supply of raw clam meat here has slowed to a trickle. "It finally looked like it could last until Feb. 15 . . . the cold weather is here and hasn't shown any letup . . . we thought [the bankruptcy action] was the best thing to do," Hanks stated.
According to the firm's lawyer in Baltimore, Conway Taylor Jr., a bankruptcy petition filed late Monday said Hanks was unable to pay debts as this time. Court documents listed assets of $1.7 million, total liabilities of $1.4 million, secured debts of $916,500, accounts payable of $355,000 and other liabilities of $528,300.
High Seas Harvesters, the Hanks subsidiary, listed assets of $520,962, secured debts of $175,741 and other liabilities of $989,381. Taylor said the subsidiary, which owns a 115-foot seagoing clammer with onboard shucking facilities, has been a source of losses to the firm for some time and now is inactive. "We don't intend to run the ship," he said.
Accountants are here to audit the company's books, and no figures were available this week on 1976 operations. Hanks said the firm's annual sales have been about $5 million.
Hanks Seafood, which sells products under the "Cap'n Hanks" brand, is a successor to three businesses started between 1950 and 1958. The company went public in 1971 with a sale of common stock, and it has been listed on the Philadelphia (formerly Philadelphia-Baltimore-Washington Stock Exchange. Before trading was halted this week, Hanks was quited Monday at 3/16 bid.
U.S. District Court Judge Joseph O. Kaiser, bankruptcy referee in Baltimore, has approved ongoing operation of the firm under current management as well as continuation of a $760,000 line-of-credit agreement with Commercial Investment Trust Corp., the largest secured creditor. No meeting of creditors has been arranged.
Hanks cleans and processes clams purchased from shuckers and clammers, with the largest share of clam meat coming from the Atlantic Ocean. The firm employs about 60 persons, many of whom are out of work for the duration of the freeze.
Maryland officials have said at least 5,000 watermen are out of work in the Chesapeake Bay region because of the cold weather. The Dorchester Community Development Corp. has been purchasing fuel for watermen unable to pay for it themselves, and the state has stepped up food-stamp aid.
President Carter's decision on Wednesday declaring parts of the region a disaster area will provide new unemployment compensation and low-interest loans to firms and individuals who have suffered losses.