AppHarvest, startup with huge greenhouses for fruits and vegetables in Appalachian foothills, files for bankruptcy

An AppHarvest greenhouse amid Kentucky's knobs (CBS News image)

AppHarvest, a nationally hailed startup that has acres-sized greenhouses to grow fruits and vegetables in Kentucky's Appalachian foothills, has filed for Chapter 11 bankruptcy reorganization. 

"The indoor produce grower made a dozen different filings in the federal bankruptcy court for the Southern District of Texas on Sunday," reports Rick Childress of the Lexington Herald-Leader. "The filings come after an eventful few months for the cash-strapped company. Last month, a creditor demanding payment opened a foreclosure lawsuit against the company’s Richmond facility. Nearly two weeks ago, the owner of AppHarvest’s Berea farm announced that it wanted to terminate the company’s lease there."

AppHarvest said Monday that it wants to restructure itself while and resolve those issues. Equilibrium, the company that foreclosed and "demanded the immediate repayment of over $60 million in debt, will provide the cash necessary to help AppHarvest continue operations at its farms in Richmond, Somerset and Morehead," Childress reports. That extra money, nearly $30 million, is subject to court approval. So is a proposed deal with its distribution partner, Mastronardi Produce, which holds title to the Berea farm and served notice weeks ago that it intended to terminate AppHarvest’s lease. Now, "AppHarvest will turn the farm over to Mastronardi in exchange for about $3.75 million and additional funding and support for its restructuring plan," Childress reports.

AppHarvest CEO Tony Martin, who recently replaced founder Jonathan Webb, said the bankruptcy route will protect the company from creditors while it implements a new strategic plan, "which has shown strong progress toward operational efficiencies resulting in higher sales, cost savings and product quality." Childress notes, "AppHarvest’s stock price fell to $0.12 following the announcement of the bankruptcy filing Monday morning, falling from the $0.34 the company closed at Friday. The price has sat below $1 since February. In April, the company received noticed from Nasdaq that it would be delisted from the stock exchange if the stock price’s did not close above $1 for 10 consecutive days before October 16, public filings show."