SeedAmerica’s Bankruptcy Leaves Small Communities in a Lurch

SeedAmerica Foundation, a charitable organization based in Apollo Beach filed for Chapter 11 Bankruptcy protection last week.  The foundation was set up to generate new jobs out of large buildings (such as warehouses, factories, office blocks and other industrial buildings) that have closed down.  What the foundation would do was take over abandoned buildings donated to them by companies who were going out of business or moving on.  In exchange the companies receive a tax write off.  This is done through a federal IRS provision, the 561 exchange.

With these buildings in hand, SeedAmerica would find new tenants to lease them out to and in the process create new jobs for the community in which the building is located.  The government benefits in the form of new taxes when the abandoned buildings are used again for business.  This is the ‘win-win’ situation SeemAmerica hails in its website.  One of the foundation’s success stories was helping ConAgra the food giant dispose of a manufacturing plant in Ashland, Ohio.  On the sidelines, one of SeedAmerica’s aspirations was to build an endowment for a business school to be run on Christian principles.

But sadly, things started to decline since the summer of 2008.  The foundation had to take up loans using the donated buildings as collateral in order to pay their bills.  Then the credit squeeze struck and loans were not so readily approved.  This brought about cash flow problems for the foundation and eventually it affected their payroll.  As a result, SeedAmerica filed for bankruptcy last week.

Barely 5 years ago, things were going well for SeedAmerica.  It had received tax-exempt status in 2005 and within three years, they had properties worth some $50 million and had employed 60 workers.  In its initial years, SeedAmerica was based in Alpharetta, Ga. near Atlanta.  It was then subsequently registered in Florida as a foreign LLC in November 2008.  It bankruptcy filing records show that it is now based in Apollo Beach Boulevard with liabilities of between $10 and $50 million.

With its bankruptcy, many small communities who were relying on its operations are now left in a lurch.  One example is Salem, Ill. whose biggest employer, Canadian-based Quebecor World, closed recently.  SeedAmerica had taken over a 700,000 square foot printing plant promising they would find new tenants for the building.  Instead, now the building is set to be demolished.

SeedAmerica has filed for Chapter 11 bankruptcy that allows for reorganization of the foundation and its debts, but its bankruptcy attorney said that the foundation intends to liquidate its assets through the bankruptcy.  It is possible that SeedAmerica’s Chapter 11 filing may be changed to a Chapter 7 to allow for liquidation of its assets.