Winchester, Ky.-based GenCanna has filed for bankruptcy in a move to reorganize more than $100 million in debt, according to the Lexington Herald-Leader.
“I think this is really a gut punch to Kentucky’s growing hemp industry. Lot of farmers spent a lot of time, a lot of hope and a lot of risk on this crop and it’s clear some processors overextended themselves in this unstable market,” Kentucky Agriculture Commissioner Ryan Quarles told the newspaper.
Originally published Feb. 4
In late January, three companies filed an involuntary petition for bankruptcy, targeting Kentucky hemp processor GenCanna and alleging that the business owes more than $50,000 in unpaid contract agreements.
GenCanna is currently building a new processing plant in western Kentucky, and general contractor Pinnacle Inc. led the charge in U.S. Bankruptcy Court. Two other companies, Crawford Sales Inc. and Integrity Architecture PLLC, joined the petition. Each company alleges that it is owed at least $16,750.
GenCanna has until mid-February to respond.
“The petition filed in the Eastern District of Kentucky is part of a legal dispute process to which we will respond soon,” Global GenCanna CEO Matty Mangone-Miranda said in a public statement. “We were involved in good faith negotiations to resolve this matter and this is an aggressive step that destabilizes that process. We are deeply disappointed with Pinnacle’s decision. The entire hemp industry is facing challenges and the situation in Graves County is one symptom of the larger challenge. It’s actions like this that further put the company and the industry at risk. We believe in Kentucky hemp and we are fighting every day to overcome this situation for our employees, farmers and vendor partners.”
This is not the first court case to highlight some financial tension within GenCanna. The local Kentucky press reports that the company has been on the wrong end of more than 70 liens targeting its new processing facility. Murtco, another contractor, insists that GenCanna owes $3.2 million, for example.
While the bankruptcy case is proceeding, those liens and foreclosure complaints are placed on standby.