AppHarvest has confirmed that it has filed for Chapter 11 bankruptcy protection.
“What’s next will depend on how the buyers wish to leverage and manage the assets — through the existing team, independently or some combination,” Travis Parman, AppHarvest’s chief communications officer, told The Packer. “The goal over the next 60 days is to find buyers who can maximize the value of the operations and largely maintain the current number of jobs across the farm network.”
As a part of the goal for AppHarvest to reduce its outstanding liabilities, the company has received a commitment from Equilibrium, the company’s largest secured creditor, of approximately $30 million debtor-in-possession financing to support operations at three of the four AppHarvest farms during the Chapter 11 process. The DIP financing is subject to court approval, according to a news release.
“We have funding to keep the business running as usual for the next 60 days at Morehead, Richmond and Somerset,” Parman said, referring to farms in Kentucky.
Also awaiting court approval, AppHarvest is seeking to sell back its farm in Berea, Ky., farm to AppHarvest’s distribution partner, Mastronardi Produce, or one of its affiliates, for approximately $3.75 million, additional incremental funding and support for the company’s restructuring plan, according to the release.
“Pending court approval, we expect to transition the Berea farm to Mastronardi Produce — the company from which we currently lease that farm. We expect Mastronardi to make employment offers to the team in Berea,” Parman said.
In the big picture, AppHarvest’s plan moving forward is to restructure the company, maximize value to creditors and preserve jobs. This means continuing business as usual during the transitions, retaining employees and shipping product to customers that include grocery store chains, restaurants and food service outlets.
“Over the next 60 days, we’ll be working to sell the farms to investors with the hope that they stay operational and continue to employ about the same number of folks as now,” Parman said. “The goal is to minimize any disruption to employees.”
The Chapter 11 filing provides protection while the company works to transition operations with its strategic plan, Project New Leaf, which has shown progress toward operational efficiencies resulting in higher sales, cost savings and product quality, AppHarvest CEO Tony Martin said in the release.
“We have financing to support business operations over the next 60 days, which we’ll use to continue implementing our strategic plan, Project New Leaf, to help ramp up productivity while reducing costs to maximize value of the operation to stakeholders and demonstrate the potential of the business,” Parman said.
Catch up on AppHarvest coverage
- Creditor seeks immediate $47.2M repayment on AppHarvest’s largest farm
- AppHarvest ousts CEO as creditors continue to knock
- AppHarvest faces foreclosure of its Richmond tomato farm
