GenCanna Global USA Inc., a leading hemp processing company in Kentucky, has filed for Chapter 11 bankruptcy that could lead to a reorganization plan, debt refinancing, or a potential sale, according to a MarketWatch report. The company will be allowed to continue operations during the process.
In a statement, CEO Matty Mangone-Miranda said the company was taking the action “in order to position [the] business for success in a highly dynamic and rapidly evolving industry.” The company indicated it had recently secured about $10 million in “post-petition debtor-in-possession” financing from its senior lender and that the infusion, which is subject to court approval, would give the company liquidity to maintain operations during the bankruptcy process.
“While this is certainly not the outcome we desired, the bankruptcy process gives us the ability to move forward in a way that allows us to best continue operations and serve customers as we work through our reorganization,” GenCann said in a press release.
Kentucky Agriculture Commissioner Ryan Quarles, a strong supporter of agricultural hemp, said it was a sign that the industry as a whole is facing “strong headwinds.” He said it is a priority to ensure farmers and contractors get paid what GenCanna owes them.
“Today’s announcement is a gut punch to Kentucky’s hemp industry and to many Kentucky farmers who dared to hope and risk on this crop.” – Quarles, in a statement, via MarketWatch
Last month, three companies – Pinnacle Inc., Crawford Sales Inc., and Integrity Architecture PLLC – filed a petition in the federal court last to initiate involuntary bankruptcy proceedings in an effort to receive payments of debts owed by GenCanna, according to a WPSD report.
In Kentucky, the home state of Majority Leader Mitch McConnell (R), who helped guide federal hemp reforms in 2018, there are nearly 1,000 growers and more than 200 processors who received hemp business licenses last year. University of Kentucky agricultural economists estimate the state’s producers could have earned between $55 million and $65 million from last year’s crop.
According to WPSD, GenCanna has an unfinished processing plant in Graves County and an unused manufacturing space in Paducah. In December, the firm laid off about 60 of its employees at its headquarters, while liens have been placed on one of its facilities by contractors who claim they were not paid for their work on the facility; at least one contractor filed a foreclosure complaint against the property. GenCanna is also accused of sending low-quality hemp seeds and violating contracts, which has led to lawsuits.
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Original Source: Embattled Kentucky Hemp Processor Files for Chapter 11
Content Credits: Originally written by TG Branfalt and published to Ganjaprenuer.com on 2020-02-07 16:40:09.