AppHarvest’s Chapter 11 plan of liquidation effective as of Dec. 5

By Sarah Lizee

Olympia, Wash., Dec. 5 – AppHarvest, Inc.’s Chapter 11 plan of liquidation went into effect on Tuesday, according to a notice filed with the U.S. Bankruptcy Court for the Southern District of Texas.

Following confirmation of the plan on Sept. 14, the debtors continued to negotiate the necessary documentation and transactions for the plan to become effective, including finalizing the sale transaction involving debtor AppHarvest Pulaski Farm, LLC’s assets located at its property in Somerset, Ky.

The company said the sale closed on Dec. 1.

AppHarvest completed other sales during the proceedings as well, including the sale of its Richmond and Morehead assets to Equilibrium, the company’s largest secured creditor, through a credit bid of prepetition debt.

The company also pursued a transition of its AppHarvest Berea operations to its distribution partner, Mastronardi Produce.

As a reminder, under the plan, other secured claims and other priority claims were left unimpaired.

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

Holders of general unsecured claims were to 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 remained 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 were to 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 were to receive no recovery under the plan.

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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