Vertical farmer Kalera files for Chapter 11 bankruptcy

Kalera, a vertical farming company based in Orlando, Fla., filed for Chapter 11 bankruptcy April 4 in the U.S. Bankruptcy Court for the Southern District of Texas.

The public limited company is known on the Nasdaq stock exchange as “KAL,” according to a news release.

Kalera will continue to operate its business as “debtor-in-possession” under the jurisdiction of the bankruptcy court and according to the bankruptcy code. The company is requesting customary relief for transitioning into Chapter 11 so that ordinary daily operations won’t be disrupted.

Jim Leighton’s employment as Kalera’s president and CEO has ended, effective March 29. Leighton also resigned from the company’s board of directors.

Related news: The Packer's Q&A with Kalera's CEO

The rest of the company’s executive management team will remain with Kalera, including: Chief Operating Officer Austin Martin, Chief Financial Officer Fernando Cornejo, founder and Chief Science Officer Cristian Toma and Senior Vice President of Human Resources Leon Lachance. These members will remain on the board: Chairman Curtis Williams, Robert Arnall, Brent de Jong, Sonny Perdue and Cristian Toma.

Kalera has a global network of hydroponic vertical farms growing greens and culinary herbs, harvested on demand year-round. Farms in Orlando, Houston, Atlanta and Denver are in operation. Farms in Seattle, Columbus, Honolulu and St. Paul, Minn., are under construction, according to Kalera's website.

Kalera also operates farms in Munich and Kuwait and had a mega-farm opening in Singapore in 2022.

Kalera PLC, Kalera S.A. and other subsidiaries — including Vindara Inc. and Iveron Materials Inc. — are not part of the Chapter 11 filing. Kalera intends to use the court-supervised process to evaluate strategic alternatives for Kalera, including a potential sale of Kalera or its assets.

To help with process, Kalera PLC has appointed Mark Shapiro, senior managing director at B. Riley Advisory Services, as chief restructuring officer. Shapiro will oversee the business and its restructuring process to further the Kalera’s business strategy and sell it for the maximum value.

“The Chapter 11 process will allow Kalera to continue operations and serve its existing customer base while it evaluates strategic alternatives for its business and assets,” Shapiro said in the release.

To enable Kalera to continue operations during the reorganization process, Kalera’s existing lender has agreed to provide Kalera with $5.1 million of debtor-in-possession financing, as long as Kalera meets some customary conditions, including the approval of the bankruptcy court, which has not been obtained by press time.

Kalera hired the Baker & Hostetler law firm to be its legal adviser and B. Riley Advisory Services to be its financial adviser to assist in the Chapter 11 case filing, its restructuring and review of all available strategic alternatives.

Related: Kalera opens vertical farming facility in Denver

Because of this ongoing review, the company was not able to file its annual report for the preceding year ending Dec. 31, 2022, by March 31, 2022. It’s not clear when that report will be made.

On April 14, 2022, according to the release, Kalera took a loan from Farm Credit of Central Florida, in which Farm Credit agreed to make:

• Revolving loans in an aggregate principal amount of up to $10 million.
• One or more term loans in an aggregate principal amount up to $20 million.

On March 21, 2023, Farm Credit informed Kalera that as of the close of business on March 17, 2023, Farm Credit had sold its interest under the loan agreement to Sandton Credit Solutions Master Fund V.

Starting this Chapter 11 bankruptcy case constitutes a default on the loan, which accelerates Kalera’s obligations under the loan. The loan agreement provides that, upon a Chapter 11 case filing, the unpaid principal and interest due under the loan agreement are automatically due and payable.

But Chapter 11 bankruptcy protects Kalera from this: Any efforts to enforce these loan payment obligations are automatically stayed as a result of the Chapter 11 case filing, according to the release, and the creditors’ rights of enforcement are subject to the bankruptcy code.

Kalera has more than 200 creditors, according to the petition for Chapter 11 bankruptcy.

Some of the creditors with the largest unsecured claims that aren’t insiders include: Orlando-based House of Plastics Unlimited Inc. for $352,053; Orlando-based accountant Grant Thornton for $345,622; Grand Rapids, Mich.-based public relations firm Lambert for $323,822.63; Columbus, Ohio-based freight brokerage firm BBI Logistics for $197,991; and Tavares, Fla.-based Aaron's Electrical Services for $116,632.35.

More information about the case is available here.

Related news, via the "Tip of the Iceberg Podcast": Where vertical farms (like Bowery) are headed