Another industrial hemp company has filed for bankruptcy at a time when the burgeoning industry is struggling to find its bearings in the face of numerous challenges.
Atalo Holdings Inc., based in Winchester, Ky., has filed for Chapter 7 bankruptcy protection, mainly citing issues with capital.
The company was one of the first hemp processing companies in Kentucky following the passage of the Agricultural Act of 2014 (the 2014 Farm Bill). The vertically integrated hemp research, production and processing company aimed to develop “reliable pathways to market for consistent hemp CBD [cannabidiol], superfood and fiber with emphasis on traceable, certified seed genetics, proven agronomics, and the mechanization of growing and harvesting,” it says on its website.
“Hemp processors, along with our farmers and other partners, have essentially created an entirely new agricultural industry. The path to success has been impeded by ‘confounding guidance’ from regulatory agencies, unforeseen market forces and other challenges,” says Atalo CEO Bill Hilliard in a news release. “Atalo, in particular, was impacted by a failed capital commitment, which left the company unable to pay its creditors.”
Atalo says it hopes to continue operation while it proceeds with its bankruptcy filing. Chapter 7 bankruptcy requires the company to sell its assets to pay creditors. The filing says the company estimates that it has assets of between $10 million and $50 million and liabilities of $1 million to $10 million.
“The inability to pay our creditors or deliver a return to our shareholders is disappointing to say the least,” says Atalo Chair Andy Graves. “But our unsurpassed agronomic experience, reliable and compliant genetics, and on-going product partners make Atalo an attractive opportunity for a timely new investor seeking revenue producing assets.”
It’s been a tough year for Kentucky hemp businesses in particular. Atalo’s bankruptcy filing is at least the third to come out of the state in 2020, following behind hemp processor Sunstrand in January and the controversial GenCanna, a hemp processor that was petitioned to file for bankruptcy due to unpaid contracts.
Atalo and GenCanna have been interwoven in their business dealings since late 2018, when GenCanna invested into Atalo to “create the largest vertically integrated hemp-derived CBD production, processing and distribution alliance in Kentucky,” according to a press release about the partnership. Their 147-acre “hemp research campus” was home to both Atalo and GenCanna's vertical supply chain operations and in 2018 employed more than 100 people.
Separate from its GenCanna dealings, Atalo also recently launched a new subsidiary, Hemp Knowbility, to provide consulting and provide quality seed for both new and established hemp growers. The company also purchased a second 50,000-square-foot facility in July 2019.