LOUISVILLE, Ky. (WDRB) -- Kentucky farming startup AppHarvest Inc. filed for bankruptcy protection Sunday, a step the company said will allow breathing room to pursue its turnaround plan.
But whether the company emerges from bankruptcy and in what form now depends on external actors, AppHarvest acknowledged.Â
"Over the next 60 days, we’ll be looking for investors or buyers to bring in capital to keep the operations going beyond that," AppHarvest spokesman Travis Parman said in an email. "What happens afterward will depend on how the buyers wish to leverage and manage the assets — through the existing team, independently or some combination."
The filing marks a new low for the once-hot sustainable food company, which briefly reached a stock market valuation of $3.7 billion following its debut as a public company in 2021.
AppHarvest built four high-tech greenhouses in eastern Kentucky in a bet on "climate resilient" agriculture. The company grows tomatoes, strawberries and other crops using less land, water and pesticides than traditional farming.
But the company produced far less than it once projected, racking up net losses totaling more than $300 million in 2021 and 2022.
AppHarvest filed for bankruptcy under Chapter 11, the portion of the code that allows companies to restructure their debts and attempt to live on, rather than pursuing a liquidation of its assets.
The company said it will continue operating three of its four indoor farms with the help of $30 million in court-overseen bankruptcy financing provided by Equilibrium Capital, one of the company's largest creditors. That financing will allow business to continue as usual at AppHarvest's Morehead, Somerset and Richmond farms during the 60-day bankruptcy period, Parman said.
Employees at those three sites "can expect to be compensated as usual and continue to have access to benefits such as their vacation days," Parman said.
Meanwhile, AppHarvest's Berea farm will "transition" to the company's distributor, Mastronardi Produce, which already owns the real estate on which that farm sits. AppHarvest sold the farm to an affiliate of Mastronardi in December and entered into a long-term lease, a move that allowed the company to raise about $60 million in cash.
The planned transaction with Mastronardi for the Berea farm will provide an additional $3.75 million to support AppHarvest’s restructuring plan, AppHarvest said in a news release.
"We expect Mastronardi representatives to meet with Berea employees about switching their employment to Mastronardi," Parman said. "We expect compensation and benefits to be comparable to what employees currently receive."
In all, AppHarvest employs 416 people directly and another 453 as independent contractors, according to the bankruptcy filing.Â
Parman said the goal is to find buyers or investors to "maximize the value of the operations and largely maintain the current number of jobs across the farm network."
AppHarvest listed $341 million in debts and assets valued at $609 million in the bankruptcy filing, the same figures reported in its financial statements as of March 31.
"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," Tony Martin, AppHarvest's newly named CEO, said in a news release.
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