AeroFarms, a prominent vertical farming company based in the United States, has recently filed for Chapter 11 bankruptcy protection. This legal move allows the company to restructure its financial and operational aspects with the support of the law.
To ensure continued operations during the process, AeroFarms has secured $10 million in financing from its existing investors. As part of the restructuring, the CEO, David Rosenberg, will step down from his position, while the CFO, Guy Blanchard, will assume additional responsibilities as the President of AeroFarms.
Despite the challenges faced by the industry, AeroFarms remains optimistic about their farm in Danville, Virginia, which is reportedly performing well. The company is committed to serving its customers and pursuing business expansion. They have engaged legal, financial, and communications advisors to guide them through this bankruptcy process.
When a company files for Chapter 11 bankruptcy protection, it seeks legal protection from creditors while it reorganizes its financial affairs. Chapter 11 is a specific chapter of the U.S. Bankruptcy Code designed for businesses, enabling them to continue their operations while developing a plan to repay their debts and regain financial stability.
The company has filed several “first day” motions with the bankruptcy court, requesting customary relief that will facilitate a smooth transition into Chapter 11 without significant disruptions to their core business operations.
AeroFarms has reached an agreement with a group of existing investors to provide $10 million in debtor-in-possession (DIP) financing, as part of a larger financing round. This financing, subject to approval by the Bankruptcy Court, along with cash generated from ongoing operations, will provide the necessary liquidity to support AeroFarms’ operations throughout the bankruptcy process.
AeroFarms’ board of directors and executive leadership have evaluated various strategic alternatives to maximize value for stakeholders. They are actively working with their DIP lender investor group on a transaction that will facilitate a swift emergence from Chapter 11. The company will also explore other financing options to maximize value and recovery for creditors.
Alongside the bankruptcy filing, David Rosenberg, Co-Founder and CEO, has decided to step down from his role. He will continue as a special advisor to the board. Guy Blanchard, the current CFO, will take on the additional role of President, working closely with a Special Committee of the Board of Directors to guide AeroFarms through the bankruptcy process.
Despite industry challenges, AeroFarms emphasizes that their Danville farm is performing as planned, and their microgreens are leading the market. The investor group supporting the company aims to ensure uninterrupted operations, serving their growing customer base and key partners, with additional retail expansions planned for 2023.
AeroFarms is being represented by DLA Piper as legal counsel, Cloudpoint Capital as the investment banker, and ICR, Inc. as the strategic communications advisor.
For more information about AeroFarms’ Chapter 11 case, a reorganization information hotline is available, along with a dedicated website for updates on the process.
To find out how the industry responded to the AeroFarms bankruptcy, we suggest The Future of Agriculture: Insights and Industries Responses.
