The next chapter?

Food on the Move: FFF’s weekly roundup of listed FoodTech’s movers & shakers

Nasdaq off 1%? End of quarter rebalancing of portfolios? Poor liquidity due to traders clocking off early for Easter? There are no shortage of reasons to explain why FFF’s listed FoodTech space found the going tough over the course of the week ended 07 April 2023.  How tough? 32 share price fallers, 15 risers and two non-movers.  That’s how tough.  And it was no better at the individual stock level…

Look no further than BOXED (BOXD), which topped the list of fallers with a stomach-turning loss of 85%.  Not surprising after the ‘will they won’t they file for bankruptcy saga' finally came to a conclusion – the eye-watering share price decline pointed to an unfavourable outcome for shareholders.  Speculation that the online grocer would file for Chapter 11 bankruptcy protection was covered by Food on the Move in “Desperately seeking reasons to be positive” back in March.  The shares have been on something of a roller coaster ride ever since. The collapse of Silicon Valley Bank which, according to the SEC filing, is where the company “held the majority of its cash deposits and other liquid instruments,” the final straw.

Over to the US Courts website for a definition of Chapter 11: “A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a ‘reorganization’ bankruptcy. Usually, the debtor remains ‘in possession,’ has the powers and duties of a trustee, may continue to operate its business, and may, with court approval, borrow new money. A plan of reorganition is proposed, creditors whose rights are affected may vote on the plan, and the plan may be confirmed by the court if it gets the required votes and satisfies certain legal requirements.”

As for BOXD, its reorganisation includes selling the software-as-a-service business Spresso to creditors and winding down the retail operations.  As co-founder Chieh Huang said: “This was an incredibly difficult decision, and one that we reached only after carefully evaluating and exhausting all available options.”

Turns out filing for bankruptcy might be catchy. Round about the same time, Kalera (KAL) announced “its wholly-owned and main operating subsidiary, Kalera, Inc. (Kalera) has filed a voluntary petition (the Chapter 11 Case) in the United States Bankruptcy Court for the Southern District of Texas (the Bankruptcy Court) seeking relief under Chapter 11 (Chapter 11) of Title 11 of the United States Code (the Bankruptcy Code). Kalera will continue to operate its business as debtor-in-possession under the jurisdiction of the Bankruptcy Court.” Chief Restructuring Officer Mark Shapiro said: “The Chapter 11 process will allow Kalera to continue operations and serve its existing customer base while it evaluates strategic alternatives for its business and assets.”   

The question is: do bankruptcies come in threes?  CubicFarm Systems (CUB) will be hoping they don’t.  The agTech had previously announced on 13 March that it had applied to the British Columbia Securities Commission (‘BCSC’) for a management cease trade order (‘MCTO’).  On 4 April Yahoo Finance reported that “the BCSC has granted the MCTO, pursuant to which the Company will have until May 30, 2023 to file its annual financial statements for the year ended December 31, 2022.” Collective thumbs up from the market – shares jumped 16.6% higher.

Worth providing some context though.  According to CUB’s 13 March announcement: “The Company believes it needs more time to prepare the annual financial statements and associated filings, and complete the financial audit with its auditor. This is primarily due to a significantly reduced headcount in the finance team in connection with the Company’s cost reduction measures as previously announced.”

All sounds relatively innocuous, at least it could have done if the announcement had ended there.  But it didn’t: “As part of its ongoing restructuring efforts, the Company is prioritizing payments in order to ensure operational sustainability. This has resulted in an outstanding balance with its auditor. The auditor has made a decision to temporarily halt services until the Company settles the outstanding balance for services provided.”  Tough times for listed FoodTech…