Terra’s Kitchen, a Baltimore-based meal kit company, has stopped operating and filed to liquidate in federal bankruptcy court.
Among the investors in the company are a partnership associated with former Ravens quarterback Joe Flacco and Hunt Valley-based Sinclair Broadcasting, both of which are listed as being owed more than $1 million for business investment.
But there appears to be little money available to cover those claims. The company filed a petition this week for a Chapter 7 bankruptcy liquidation in Maryland’s U.S. Bankruptcy Court, listing assets of just over $15,000, but debts of nearly $20 million.
When it filed the bankruptcy paperwork, Terra’s Kitchen had just $366.77 in a Bank of America checking account.
According to its website, Terra’s Kitchen took “a short break from day-to-day delivery operations starting August 12th.”
Following in the footsteps of such industry names as Blue Apron and Hello Fresh, the meal delivery start-up launched in 2015 and began operating out of a kitchen in Canton the next year. It allowed consumers to subscribe to weekly or monthly deliveries, with came packed with everything needed to prepare meals in about 30 minutes.
Terra’s Kitchen appeared on the verge of a major expansion, The Baltimore Sun reported in 2017. That year, the company had gained a foothold in most states, and was reportedly available to about 85 percent of the U.S. population.
But businesses in the meal delivery space have struggled amid increased competition from restaurant and grocery delivery operations as well as niche players. Problems, analysts say, have included the cost of preparing and shipping foods while maintaining quality and freshness.
After a strong start, the company’s sales plummeted in recent years, falling from $14.9 million in 2017 to $6.4 million in 2018 to just $1.5 million so far in 2019, according to the bankruptcy filing.
In a letter to investors obtained by The Baltimore Sun, Brendan Connors, Terra’s Kitchen’s chief financial officer, wrote this week that the company would cease operations after struggling to raise capital “in the current environment surrounding the meal kit space.”
Among those investors is JMSJBT INV LLC, a limited liability company that shares an address with Flacco’s boyhood home and is managed by his father, Stephen Flacco. Court documents show the Flacco firm appears to have invested $1.07 million in July 2018, a few months before Terra’s Kitchen announced a promotional partnership with Flacco and he began appearing in its marketing campaign.
Flacco, who led the Ravens to a Super Bowl win in 2013, moved this season to the Denver Broncos after losing his starting position to Lamar Jackson.
The company changed course this year, partnering with a DNA testing company to offer meal plans that aligned with customers’ DNA testing results. However, the strategy cost the company even more money, Connors wrote to investors.
Other investors include Sinclair Broadcasting, which invested more than $1 million in June 2018, and the New York venture capital firm Tuhaye Venture Partners, which invested more than $3 million in 2016. Connors invested $3.2 million and former CEO Michael McDevitt of Annapolis invested $5.9 million in the company. Both Connors and McDevitt are former executives of Medifast, the Baltimore-based weight-loss company.
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Another New York firm, Feenix Venture Partners, has a $597,272 claim secured by a lien against Terra’s Kitchen brand.
While Terra’s Kitchen list of unsecured creditors includes a number of smaller investors, it’s largely made up of trade debts due vendors, including Facebook, due $309,000, and Google, owed nearly $292,000, likely for online advertising.
A judge recently ordered the the company to pay more than $100,000 to Baltimore’s Jellyfish Online Marketing. And it recently settled a class action lawsuit with California customers regarding subscription disclosures.
A meeting of creditors is scheduled for Nov. 1 at the U.S. Courthouse in Baltimore.