More bad (and sad) news for vertical farming as AeroFarms files for Chapter 11 Protection

AeroFarms has announced that, after careful consideration by its board, it has filed for voluntary protection under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the District of Delaware. In addition to the petition, the company has 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 ongoing core business operations.

The company has also entered into an agreement with an existing group of AeroFarms investors to provide US$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.

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. During this time AeroFarms will continue to explore other financing options so as to maximize the value of the company and recovery to creditors.

Coincident with the filings, the company has also announced that David Rosenberg, Co-Founder & 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. 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. Lacy is Global Sustainability Services Lead, Chief Responsibility Officer, and a Global Management Committee Member at the consulting firm Accenture.

Although 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 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,” commented Blanchard. “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.”