AppHarvest (Nasdaq: APPH) has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Texas.
The Morehead, Kentucky-based indoor agriculture company made the announcement in a news release Monday, calling it a move to support a "financial and operational transition."
It said it has secured $30 million in debtor-in-possession financing from its largest creditor, Equilibrium, which had previously sought the repayment of a $66.7 million loan that was used to construct AppHarvest's 60-acre tomato farm in Richmond, Kentucky.
AppHarvest has four high-tech indoor farms across Appalachia. It's faced a series of financial issues after constructing the massive farms, ranging from 15 to 60 acres, as revenues failed to make the company self-sustainable.
Now the company is planning to transition the operations at its farm in Berea, Kentucky, to its distribution partner Mastronardi Produce, after Mastronardi claimed AppHarvest was in violation of the lease with respect to minimum production volumes.
If that deal goes through — it's now subject to approval of the court — it will give AppHarvest about $3.75 million, as well as additional incremental funding and support for its restructuring plan.
The company says it is "diligently working to restructure the operations at the company in an effort to maximize the value creditors can expect to achieve and to preserve jobs," the release said.
“The AppHarvest board of directors and executive leadership evaluated several strategic alternatives to maximize value for all stakeholders prior to the Chapter 11 filing,” said AppHarvest CEO Tony Martin in the release. “The Chapter 11 filing provides protection while we work to transition operation of our strategic plan, Project New Leaf, which has shown strong progress toward operational efficiencies resulting in higher sales, cost savings and product quality.”
Martin, formerly AppHarvest's COO, was named CEO earlier this month, replacing founder Jonathan Webb, who moved into a chief strategy officer position.
Just last week, WDRB reported that several AppHarvest execs, including Webb and Martin, were part of a nearly $2.5 million in cash payments to several executives, a move the company said was made to continue progress under Martin.
In addition to the loan from Equilibrium, Rabo AgriFinance LLC, a Delaware limited liability company, is seeking the immediate repayment of a $47.2 million loan, I reported last week.
In addition to its Morehead, Richmond and Berea facilities, AppHarvest also has a farm in Somerset, Kentucky. It reported net sales of $13 million and a net loss of $33.6 million during the first quarter of 2023.
AppHarvest stock sunk when trading opened Monday, falling more than 65% as of 9:30 a.m. Its price per share was about 11 cents at the time.
In the release, AppHarvest said operations will continue at the farms, including shipping product to top national grocery store chains, restaurants and food service outlets.
AppHarvest was founded in 2017 and went public in 2021, at one time supporting as many as 700 jobs.
This story could be updated.
