AeroFarms files for auction approval in Chapter 11 restructuring efforts

Stalking horse bidder and $10M DIP financing secured to support ongoing operations

by CEA inSight
aerofarms mixes

AeroFarms, Inc. provided an early morning update on its business today, including details of a July 11 filing for Bankruptcy Court approval to conduct an auction and sell company assets while continuing normal business operations. As the company works toward a successful resolution of its Chapter 11 bankruptcy case, AeroFarms reports its strategic focus remains on its commercial indoor vertical farm in Danville, Virginia, where plans to scale microgreens production continue.

On Tuesday, July 11, 2023, AeroFarms filed with the United States Bankruptcy Court in Delaware (Case No. 23-10737) a supplement to a previously filed Motion to Approve Bid Procedures, requesting Court approval to enter into an asset purchase agreement (APA) and designate a stalking horse bidder. The company seeks to conduct an auction to sell company assets under Section 363 of the Bankruptcy Code (363 Sale), while its ordinary business operations remain intact.

On July 10, 2023, the company signed an APA with AF NewCo, Inc., a newly formed entity owned by a group of existing investors including Grosvenor Food & AgTech, INGKA Investments Ventures US BV, Cibus Fund and ACEG Beteiligungsgesellschaft mbH. The APA calls for AF NewCo to act as stalking horse bidder to acquire the company’s assets.

The bidding procedures and timeline for the auction, which are subject to approval by the Bankruptcy Court, intend to provide a prompt sale of the company’s assets, thereby providing clarity on AeroFarms’ future to customers, vendors and employees — and placing AeroFarms back on a successful path. Subject to the Court’s calendar, the company is seeking entry of an order from the Bankruptcy Court confirming the results of the 363 Sale on or before August 22, 2023.

AF NewCo also provided a debtor-in-possession (DIP) loan of $10 million. Under the terms of the APA, AF NewCo will be credit-bidding its DIP, assuming substantial operating liabilities, and funding the wind-down of the Chapter 11 proceedings.

AeroFarms recently received Court approval to continue paying employees, vendors and other entities in the ordinary course of business and will utilize the funding provided by the DIP loan to do so.

Today’s news follows AeroFarms’ June 8 announcement that the company had filed for voluntary protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. At the time, the company stressed it would continue to focus on its commercial indoor vertical farm in Danville, Virginia, and that plans to scale the facility’s microgreens production would be unaffected.

Since that time, the company has announced the expanded retail availability of its microgreens at both Walmart and Stop & Shop across the Mid-Atlantic and Northeast, respectively. This expansion follows the national expansion with Amazon Fresh online and at all Amazon Fresh grocery store locations, which built on a successful national launch with Whole Foods Market in 2022.

“We are excited by the growing customer demand for our market-leading microgreens and to be expanding our retail presence and look forward to emerging stronger and better positioned to prosper into the future,” said Guy Blanchard, President of AeroFarms, formerly the company’s Chief Financial Officer. “We will continue to work in close cooperation with all of our stakeholders to conduct our financial and operational restructuring, which will position us for long-term success.”

Court filings and other documents related to the reorganization proceedings are available on a separate website administered by the Company’s claims agent, Omni, at or, the official Bankruptcy Court website.

Image: courtesy of AeroFarms, Inc.

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