A U.S. bankruptcy judge approved the $77 million sell-off of GenCanna's assets as part of a deal to reorganize, liquidate and then allow the company's creditor, MGG Investment Group, to recoup what it had put into the Kentucky hemp firm.
The bankruptcy filing follows headlines surrounding GenCanna's rapidly rising debt and unpaid contract agreements. (See original story below.)
"We are taking this action in order to position our business for success in a highly dynamic and rapidly evolving industry," Matty Mangone Miranda, CEO of GenCanna Global, said in a public statement at the time of the bankruptcy filing. "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, resolve an outstanding legal dispute involving our Western Kentucky facility, navigate an uncertain regulatory environment and adjust our annual operating costs to better match the landscape."
MGG Investment Group is one of several private lenders that have infused the nascent hemp industry with cash.
Updated Feb. 7
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.