New Zealand's first large-scale vertical farming business was not able to reach sufficient scale to achieve profitability and attempts to help it continue to trade have failed, the first administrators' report reveals.
Greenleaf Fresh appointed liquidators on December 30.
It produced goods under the Green Grower brand and had earlier received $3.5 million in public funding for research.
Administrators Adele Irene Hicks and David Ian Ruscoe, of Grant Thornton New Zealand, released their first report on January 6.
It noted that the business used advanced technology to grow leafy greens such as lettuce, kale, rocket, herbs and microgreens in Hamilton in a 5662sq m facility.
This used about 95 percent less water than conventional horticulture, they said, and the controlled environment meant no pesticides were needed and the produce could be grown year-round.
It was supplying supermarkets and wholesale food service providers across New Zealand, primarily in the North Island.
As well as the Green Grower brand, it had produce sold as Pam's and Value.
The administrators said there had been a number of reasons for the business failure.
As well as the insufficient scale to achieve profitability, there were delays with the completion of capital works to increase scale and insufficient working capital to fund ongoing losses of operations under one tunnel, and the business was not able to raise additional funds.
"The directors ultimately formed the view that voluntary administration was preferable to liquidation, as this could allow for the opportunity to undergo a restructuring process with a deed of company arrangement, and to emerge as a viable business if suitable funding can be obtained in short order.
"Following our appointment, we visited the site and discussed with management the operational costs of the business and made an assessment as to the best way forward. After a review of potential income and expenses for the administration, we were unable to find a viable scenario which would allow us to trade whilst we find a potential buyer. As such, without funding, we have closed down the business and will look to sell the business as a whole."
The company had 55 employees owed about $229,000 in leave.
The administrators said it also had arrears with Inland Revenue for PAYE for December.
It probably also owed nearly $500,000 to Customs, they said.
Unsecured creditors were owed about $2.2m, the report said, but that number was likely to increase.
