Indoor vertical farming company AeroFarms, Inc. announced Monday that it has completed its restructuring and emerged from Chapter 11 bankruptcy.
The 19-year-old company said it has received bankruptcy court approval to move forward on an asset purchase agreement with a group of investors led by Grosvenor Food & AgTech (GFA). The restructuring also expands AeroFarms’ relationship with Doha Venture Capital, the company said in a press release.
AeroFarms also named food and agriculture industry veteran Molly Montgomery, who is also a venture partner with Grosvenor Food & AgTech, to serve as acting CEO and executive chairperson of the AeroFarms board of directors. She is a board director for agriculture products manufacturer Wilbur-Ellis; wine producer The Wine Group; food tech company Benson Hill; and meal-kit company Custom Made Meals, where she served as CEO.
“As we face the mounting challenges of climate change and food insecurity, we need to rethink our global food supply chain,” said Montgomery in a statement. “AeroFarms is a testament to the innovative thinking required to deliver highly nutritious food in a more sustainable and cost-efficient manner."
AeroFarms filed for Chapter 11 on June 8, and its then-CEO David Rosenberg, one of the company’s co-founders, stepped down from his role. Chief Financial Officer Guy Blanchard has served as president of the company since Rosenberg's departure from the role.
The Newark, New Jersey-based vertical farming industry leader said that with its balance sheet strengthened by investor support, the company will now focus on achieving profitability at its fully automated, 140,000-square-foot flagship operation in Danville, Virginia.
AeroFarms also announced that it is halting spending “on all projects that do not contribute to the ramp-up of the Danville Farm, thereby accelerating its path to profitability.” That ramp-up of the Danville operation is expected to be completed by the end of the year, and AeroFarms should achieve profitability soon after, the company said.
AeroFarms co-founder and Chief Marketing Officer Marc Oshima told Winsight Grocery Business earlier this month that investors “understand our commercial operations and where we are in terms of the technology, improved performance and scale, and they put millions back into the organization.”
Stephan Dolezalek, managing partner of Grosvenor Food & AgTech (GFA) called the emergence from bankruptcy “a new chapter” for the maturity and growth of the company. “AeroFarms’ founders established the world’s most advanced vertical farming technology,” Dolezalek said in a statement. “We have now put in place changes needed to deliver on their vision. As an investor dedicated to creating a more sustainable global food supply chain, we see vertical farms as a critical part of the solution and are now focused on efficiently scaling our operations to deliver a market-leading product through a profitable business model.”
AeroFarms said its microgreens sales are strong, and the Danville Farm operation grows the product on a year-round basis. The company launched nationwide with Whole Foods in 2022 and expanded to Amazon Fresh stores in May.
In June, the indoor farming company announced an expanded retail availability at Walmart and Stop & Shop locations across the Mid-Atlantic and Northeast. The company also said in June that its presence at Ahold Delhaize USA stores has increased more than 35%. The brand is also available at H-E-B, Harris Teeter and other supermarkets across the country.
The back-to-basics approach on the Danville operation and focus on profitability entails the shuttering of research and development projects the company was working on prior to the bankruptcy, Oshima told WGB. Some of those long-term projects include growing hops for Anheuser-Busch InBev, blueberries for Horta Fruit and cacao for global food corporation Cargill, Oshima said.
“We actually commercialized the beer with AB InBev, but it was a much longer path to profitability for those operations,” he said. “And so, you know, we had built out a bigger team and, you know, that sort of macro background, the backward pressures in terms of the additional financing that we were looking to be able to support some of these new areas of research and development, just weren't there just given the macro pressures with the war, Silicon Valley and higher interest rates, so the marketplace changed.”
He said leafy greens are now the focus because AeroFarms has been able to "demonstrate the right kind of yield, throughput and economics to be able to understand the right kind of CapEx (capital expenditure) investment.” The company’s success with leafy greens also stems from the product’s short shelf-life and inability to travel well.
“We've been able to address all that and then get the right throughput and get the right flavor profiles,” he said. “It's really connected with key tastemakers, the chefs and the buyers and then ultimately consumer.”
The news of AeroFarms' bankruptcy filing in June came during a difficult moment for the industry, with investors demanding profitability. Indoor farming company AppHarvest filed for Chapter 11 bankruptcy in July, noting that it plans to sell one of its operations in Berea, Kentucky, for $3.75 million in an effort to "maximize the value creditors can expect to achieve and to preserve jobs.”
Indoor vertical farm company Plenty, meanwhile, secured an investment from Walmart during a $400 million Series E funding round at the beginning of the year. The company also announced in late August that it had doubled its retail footprint and began distributing at all Whole Foods and Gelson’s locations in California. The company launched an indoor farm in Compton, California, in May which will ultimately produce 4.5 million pounds of greens a year.