AppHarvest receives confirmation of Chapter 11 plan of liquidation

By Sarah Lizee

Olympia, Wash., Sept. 15 – AppHarvest, Inc. received confirmation of its Chapter 11 plan of liquidation on Thursday, according to an order filed with the U.S. Bankruptcy Court for the Southern District of Texas.

As previously reported, the company filed bankruptcy with plans to continue business operations at its farms, including shipping product to top national grocery store chains, restaurants and food service outlets.

The company obtained a commitment from Equilibrium, the company’s largest secured creditor, to provide about $30 million of debtor-in-possession financing to provide liquidity to support operations at the AppHarvest Morehead, AppHarvest Richmond and AppHarvest Somerset farms during the Chapter 11 process.

Equilibrium also agreed to purchase the company’s Richmond and Morehead assets through a credit bid of prepetition debt, which is equal to about $113.18 million.

The company said it is pursuing a transition of its AppHarvest Berea operations to its distribution partner, Mastronardi Produce, or one of its affiliates, in exchange for about $3.75 million, additional incremental funding and support for the company’s restructuring plan.

AppHarvest said it is working to restructure its operations in an effort to maximize the value creditors can expect to achieve and to preserve jobs.

Under the plan, other secured claims and other priority claims are unimpaired.

Holders of Greater Nevada Credit Union, Richmond or Morehead facility claims will receive either the proceeds from the sale of their respective collateral, or, if a holder decides to credit bid its collateral, the ownership of those assets.

Holders of general unsecured claims will receive their pro rata share of a $1 million carveout from the Somerset sale, a $750,000 DIP carveout, $100,000 of the Mastronardi Berea payment, an allocation from the sale of robotics assets, an allocation from the Red Sea Farms Ltd. sale, any portion of the committee budget that remains after payment of fees for professionals, and 50% of any tax refunds received by the debtors, in each case subject to dilution by Dalsem unsecured claims below.

Holders of Dalsem unsecured claims will receive their pro rata right to recovery pari passu with general unsecured claims.

Holders of intercompany claims, section 510(b) claims, existing equity interests and intercompany interests will not receive anything.

The sustainable food company is based in Morehead, Ky. The company filed bankruptcy on July 23 under Chapter 11 case number 23-90745.

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