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Bankruptcy and financial troubles at Smartkas create market turmoil

The bankruptcy of the British branch of vertical farming company Smartkas this spring is not an isolated incident. On top of that, the company is struggling with significant financial and legal issues in the Netherlands.

Specializing in strawberry vertical farms, Smartkas which is led by CEO David Meszaros, started with numerous ambitious plans. For instance, the construction of a strawberry vertical farm in Harlow, near London, another one in Amsterdam, and a mega-project in Brazil, which was announced two years ago.

UK farm dismantled and a big court case
However, the tables seem to have turned as both vertical farms are no longer in business, and the British installation has even been dismantled. CEO David Meszaros told BBC last summer that the company had been seriously affected by a chip shortage, which 'severely delayed the construction of the Amsterdam vertical farm'. Production in the United Kingdom also didn't flourish as cultivation was halted a few months after their claimed kick-off in December '22.

At the beginning of the year, the British business gas and electricity supplier of the farm filed for bankruptcy of Smartkas. Despite Smartkas downplaying the issues and requesting to await ongoing proceedings due to an alleged agreement with creditor United Gas & Power, a trustee has now been appointed for the British bankruptcy.

The Dutch waters are also quite troubled as several parties have been waiting for payments for a long time now, after supplying technology and materials to Smartkas. Whether these payments will be made is yet uncertain, as various legal proceedings are underway. The resolution of these lawsuits is expected to take several months or more.

Smartkas was founded in 2020 and went public in Frankfurt a year later, raising 25 million euros to establish vertical farms in several European countries. Yet, thus far, investors have seen very little to no return on their investment. Sustainable Capital, listed on the Frankfurt Stock Exchange, had to announce earlier this year that it could not pay interest again, following missed interest payments on July 21, 2023, and October 21, 2023. It said that 'there is insufficient money from the borrower, Smartkas Project Finance B.V., to make the required interest payments.'

Dutch concerns
In the Netherlands, there is no bankruptcy yet, however, the numerous developments around Smartkas have caused a lot of concerns. Several parties have approached our editorial team about the Smartkas developments, reporting that equipment from the Amsterdam vertical farm is put up for sale.

The Dutch parties still awaiting payment are worried that other companies might supply to Smartkas, only to face non-payment or significant delays. One of the companies now awaiting payment doubts the company's intentions, 'as it was never clear what crop was supposed to be cultivated in the company's Amsterdam farm site.

With the declared bankruptcy in the United Kingdom and the current issues in the Netherlands, Smartkas joins a list of other vertical farming companies that have struggled since the energy crisis and had to either significantly downsize, or worse, cease operations.

The editorial team spoke to several involved parties, including Smartkas which to date has been silent. Inquiries to both United Gas & Power and the British trustee have also gone unanswered.