AppHarvest, a Kentucky-based indoor agriculture company, has filed for bankruptcy in the federal bankruptcy court for the Southern District of Texas.
The company’s financial challenges led to this decision, including concerns over cash flow and the potential foreclosure of its Richmond greenhouse, which were disclosed to investors back in November. CEO Tony Martin addressed the Chapter 11 filing, stating that the company’s board of directors and executive leadership thoroughly evaluated various strategic alternatives to maximize value for stakeholders.
The Chapter 11 filing offers protection while AppHarvest works on implementing its strategic plan, Project New Leaf, which has shown promising progress in operational efficiencies, higher sales, cost savings, and improved product quality.
As part of the bankruptcy proceedings, AppHarvest is seeking a financial and operational transition to reduce its liabilities. To facilitate this transition, the company sought protection under Chapter 11 of the U.S. Bankruptcy Code.
In a significant development, AppHarvest has obtained a commitment from Equilibrium, its largest secured creditor, to provide around $30 million of debtor-in-possession financing. This financing will help support ongoing operations at the company’s farms in Morehead, Richmond, and Somerset during the bankruptcy process.
AppHarvest is determined to maximize value for its creditors and preserve jobs at its various locations. As part of its restructuring plan, the company is exploring the possibility of transitioning its Berea operations to its distribution partner, Mastronardi Produce, or one of its affiliates. In return for this transition, AppHarvest expects to receive approximately $3.75 million in additional funding and support.
Despite the challenging period, AppHarvest remains committed to navigating through the bankruptcy process with the backing of its creditors and partners.