London, Ont. cricket plant ordered into receivership amid $41M debt bill to creditor

Months after it announced layoffs impacting two-thirds of its workforce, Aspire Food Group, the London-based insect agriculture firm specializing in farming crickets for use as protein, has been ordered into receivership by an Ontario court.

Last week, a Superior Court of Ontario justice ordered that FTI Consulting be appointed receiver of Aspire and its related entities, and all "assets, undertakings, and properties" acquired or used by the firm at its Innovation Drive facility, along with its proceeds.

The order followed an application filed by Farm Credit Canada (FCC) in February to appoint FTI Consulting as receiver and manager, saying Aspire owed it nearly $41.5 million under an amended credit agreement reached the previous year.

Aspire opened the plant in 2022 with the goal of producing up to 13 million kilograms of the insect annually for use as an alternative consumable protein source, it's co-founder told CBC News at the time. A vast majority of the plant's production was for the pet food industry.

The 14,000-square-metre plant was opened with the help of roughly $35 million in federal funding through Sustainable Development Technology Canada, Agriculture and Agri-Food Canada, and NGen under Ottawa's Global Innovation Clusters initiative.

In November, Aspire announced it would lay off 100 of its 150 workers at the plant to renovate its production system, with plans to rehire workers this July.

In its application, FCC says Aspire built the London facility based on "proprietary cricket growth and harvesting methodology" developed in a research and development facility in Austin, Texas.

Since opening in London, the company had been unsuccessful in replicating the methodology and had failed in commercializing and scaling its operations, FCC's application says.

"As a result of the fundamental operational issues plaguing the Facility, the Aspire Group has not been able to produce positive cash flow/earnings, and production has come to a complete halt in order for the Aspire Group to focus on research and development."

It adds FTI was brought on as a consultant to monitor Aspire's monthly statements and operating metrics. Aspire was also required by FCC to sustain a minimum cash balance of $1 million.

"Notwithstanding these amendments, the Aspire Group has failed to recommence production, and its working capital is rapidly depleting," FCC's application reads, adding Aspire was in default of the agreement after failing to maintain the required cash balance.

CBC News has reached out to Aspire CEO David Rosenberg, co-founder Mohammed Ashour, and legal counsel for Farm Credit Canada and FTI Consulting for comment. This story will be updated when they respond.

While the plan was to be at full capacity by 2023, the London plant has been operating at half capacity since May 2024, Dale Snider, a senior corporate and commercial account manager at FCC, said in an affidavit filed in court in February.

"At certain points, production has completely shut down in order for the Aspire Group to focus on research and development," the affidavit says. Snider notes farming and processing crickets as requiring specialized equipment and a "precisely timed, automated production line."

Differences in geography and environment, as well as in the design and build of cricket habitats between the Austin R&D facility and the London plant, have led to "operational and scalability issues," the affidavit says.

Adding to the strain, Aspire, which owns the London plant through another company, owed roughly $1 million in back property taxes to the City of London as of late January.

"The proposed receiver is deeply familiar with the Aspire Group's business and operations and is prepared to oversee an orderly wind-down of operations at the facility and an eventual sale of the Aspire Group's property through a transparent and court-approved process," Snider says in his affidavit.

As security under the loan agreement, FCC was provided a first charge/mortgage against the London facility in the principal amount of $60 million.

A factum filed by FCC in court that same month highlights additional causes of Aspire's financial troubles.

Among them, the drying up of government grants and cost reimbursement programs it previously relied on, and "economic uncertainty and market volatility" from threatened U.S. tariffs on goods imported from Canada.

Nearly all of its production is exported to the U.S., the company said in a LinkedIn post in February.

"We remain committed to Aspire's mission and our leadership in sustainable protein. But we cannot ignore the scale of these disruptions," Rosenberg is quoted in the post as saying.

On May 1, FCC told the court it had given Aspire many chances to resolve its issues, including opportunities to secure emergency liquidity to meet payroll, and additional time to finalize repayment.

"Despite these accommodations, the Aspire Group has not been successful in formalizing any repayment transaction that will see the indebtedness repaid in the short or long-term," a supplementary factum filed by FCC states.

"At this juncture, it has become clear to FCC that the possibility of the Aspire Borrowers finalizing a repayment transaction in the near term and on terms satisfactory to FCC is negligible."

Since opening, the London plant has been dogged by bizarre conspiracy theories that it's part of a shadowy government plot to force people to eat insects.

In 2022, Aspire signed a memorandum of understanding with a Korea-based food distribution company to identify markets in Asia and Europe for its product.