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AeroFarms Files For Chapter 11, AppHarvest At Risk Of Foreclosure

Discover the latest news from the world of indoor vertical farming.

Thanks to Artechno Growsystems for keeping this edition free.

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Welcome to This Week in Indoor Farming. In recent news, AeroFarms®, a global pioneer in indoor vertical farming, has filed for Chapter 11 bankruptcy. The company has also secured $10 million in debtor-in-possession financing to support its operations.

Meanwhile, AppHarvest, an ag-tech company, faces financial strain due to defaults and a demand for immediate repayment of $66.7 million from CEFF II AppHarvest Holdings, LLC. We'll keep you updated on these developments and more in indoor farming.

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This Week in Indoor Farming

AeroFarms®, a global pioneer in the indoor vertical farming sector, has voluntarily filed for protection under Chapter 11 of the U.S. Bankruptcy Code. Following the Company's board deliberations, the petition was filed in the United States Bankruptcy Court for the District of Delaware. Alongside the petition, AeroFarms has submitted several ‘first-day’ motions seeking standard relief to transition into Chapter 11 with minimal disruptions to its core business operations.

Simultaneously, AeroFarms has confirmed an agreement with an existing consortium of investors to provide $10 million in debtor-in-possession (DIP) financing. The proposed financing, part of a larger round involving the same investors, is pending approval by the bankruptcy court. Subject to court approval, the DIP financing, supplemented by cash generated from continuing operations, is anticipated to provide the necessary liquidity to support AeroFarms’ operations throughout the bankruptcy process.

Before initiating the Chapter 11 filing, the Company’s leadership thoroughly evaluated strategic alternatives to optimize value for all stakeholders. Leveraging the protections provided by the bankruptcy process, AeroFarms is collaborating with its DIP lender investor group to facilitate a swift emergence from Chapter 11. Meanwhile, the Company continues to explore additional financing options to maximize recovery for its creditors and overall corporate value.

AppHarvest, the pioneering ag-tech company based in Richmond, Kentucky, is under financial strain following a Notice of Default and Reservation of Rights from CEFF II AppHarvest Holdings, LLC (“CEFF”). The notice, received by AppHarvest Richmond Farm, LLC, the Borrower Subsidiary, alleges defaults related to unapproved increases in the construction budget and delays, a mechanic’s lien, and purported construction deficiencies.

Adding to AppHarvest’s woes, CEFF, an affiliate of Equilibrium Sustainable Foods, LLC, issued a Notice of Acceleration on May 30, 2023, based on the previously asserted events of default. The Notice demands immediate repayment of $66.7 million, comprising principal and accrued interest, along with any further fees, costs, and other obligations under the Equilibrium Credit Agreement.

AppHarvest Richmond Farm‘s assets, including the Richmond Property and the pledge of 100% of the limited liability company ownership interests by AppHarvest Operations, Inc., secure the Equilibrium Credit Agreement. AppHarvest, Inc. also guarantees the agreement. Post-alleged default, CEFF reserves the right to initiate measures such as judicial foreclosure of the Richmond Property or a suit against the Borrower Subsidiary to recover the debt.

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