US vertical farming company AeroFarms has filed for Chapter 11 bankruptcy protection. This means they are seeking legal protection to restructure their finances and operations.
The company has secured $10 million in financing from existing investors to support their operations during the process. The company's CEO, David Rosenberg, will step down, and the CFO, Guy Blanchard, will take on additional responsibilities as the President of AeroFarms.
Despite the challenges faced by the industry, the company says their farm in Danville, Virginia is performing well, and they aim to continue serving their customers and expanding their business. They have engaged legal, financial, and communications advisors to assist them during this process.
When a company files for Chapter 11 bankruptcy protection, it means they are seeking legal protection and relief from their creditors while they reorganize their financial affairs. Chapter 11 is a specific chapter of the U.S. Bankruptcy Code that is primarily designed for businesses and allows them to continue their operations while developing a plan to repay their debts and become financially stable.
First day motions
In the official release, the company says they filed various “first day” motions with the bankruptcy court requesting customary relief that will enable it to transition into Chapter 11, with limited disruptions to its on-going core business operations.
The company has entered into an agreement with an existing group of AeroFarms investors to provide $10 million in debtor-in-possession (“DIP”) financing, as part of a larger round of financing that includes those investors. Approval of the DIP financing is part of the first day motions filed with the bankruptcy court. Upon approval by the Bankruptcy Court, the DIP financing, together with cash generated from ongoing operations, is expected to provide AeroFarms with the necessary liquidity to support its operations during the bankruptcy process.
Plans to emerge from Chapter 11
Prior to the filing of the Company’s Chapter 11 case, the board of directors and executive leadership evaluated a range of strategic alternatives to maximize value for all stakeholders. "With the protections afforded in the bankruptcy process, the Company is working with its DIP lender investor group on a transaction to enable it to quickly emerge from Chapter 11", they add. During this time the Company will continue to explore other financing options so as to maximize the value of the Company and recovery to creditors.
CEO change
Coincident with the Filings, the Company also announces that David Rosenberg, Co-Founder and Chief Executive Officer has decided to step down from his CEO role and will work as a special advisor to the Board. Chief Financial Officer Guy Blanchard will assume the additional role of President of AeroFarms where he will be working closely with a Special Committee of the Board of Directors consisting of Jim Borel and Peter Lacy, both long-term AeroFarms independent board members, to help guide the Company through the bankruptcy process. Mr. Borel has more than 45 years of industry experience as an executive at DuPont and as a member of the boards of several agriculture and food companies. Mr. Lacy is Global Sustainability Services Lead, Chief Responsibility Officer, and a Global Management Committee Member at the consulting firm Accenture.
"While the vertical farming industry has recently faced significant industry and capital market headwinds, AeroFarms’ critical Danville, Virginia farm continues to scale according to plan, and AeroFarms microgreens have become the dominant market leader at retail", the company shares. "The primary focus of the investor group is to assure that AeroFarms will operate as usual throughout the Chapter 11 filing, servicing its growing customer base and key selling partners, including additional retailer expansions planned for the remainder of 2023."
“We are fortunate to have existing investors who continue to believe in AeroFarms and are confident that we can hit our targeted profitable operations for our Danville farm,” said Guy Blanchard, President and CFO of AeroFarms. “There is incredible consumer and customer interest for our market-leading microgreens, and we are excited to continue be able to build our business to meet that demand.”
AeroFarms is represented by DLA Piper as counsel, Cloudpoint Capital as investment banker and ICR, Inc. as strategic communications advisor.
For more information about AeroFarms’ Chapter 11 case, please call the reorganization information hotline at 888-480-9117 (US & Canada toll free) and 747-263-0668 (International) or visit the following website https://omniagentsolutions.com/AeroFarms.