GenCanna Global USA Inc. announced it has filed a bankruptcy petition to work out a reorganization plan that could lead to debt refinancing or a potential sale. The Chapter 11 filing would allow it to continue operations during a reorganization, the company said.
“We are taking this action in order to position our business for success in a highly dynamic and rapidly evolving industry,” GenCanna CEO Matty Mangone-Miranda said in a statement.
Kentucky Agriculture Commissioner Ryan Quarles said the bankruptcy filing was the latest sign that the national hemp industry is facing “strong headwinds.” Kentucky positioned itself at the forefront of hemp’s comeback and Quarles is an enthusiastic advocate for the crop.
“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 said in a statement.
Quarles called it a priority to ensure that farmers and contractors get paid what GenCanna owes them. Hemp farmers contract with processors to supply the crop that can be turned into a myriad of products, including CBD oil.
GenCanna said Thursday it had obtained about $10 million in “post-petition debtor-in-possession” financing from its senior lender. That cash infusion, subject to court approval, would provide the company with liquidity to maintain operations during the bankruptcy process, it said.
In its release, GenCanna said Thursday its Chapter 11 filing allows it to “continue to operate its business without interruption to customers, vendors, partners and employees while working through a reorganization plan that could include refinancing of the company’s existing indebtedness, or an alternative restructuring transaction such as a sale.”
The company, founded in 2014, pointed to the need to adjust its operating costs to “better match the landscape” amid an uncertain regulatory situation.
“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,” the company release said.