MARSHALL — A company that announced plans to build a shrimp production company in Madison, South Dakota, in 2019 is going through insolvency proceedings in Lyon County District Court.

According to Lyon County court records, documents for the assignment for benefit of creditors of Iterro, Inc., were filed in November. The documents were filed around the same time that Iterro Life Sciences President and CEO Brian Knochenmus confirmed to the Independent that Iterro was closing down its facility in Balaton.

The assignment for benefit of creditors, filed Nov. 20 in Lyon County District Court, said Iterro was in debt and was unable to pay debts as they became due. Court documents said Iterro’s property was assigned to Lighthouse Management Group, Inc., of New Brighton. As a receiver, Lighthouse would take control of Iterro’s property and liquidate it.

Documents filed in Lyon County court on Tuesday said Lighthouse had received an offer to purchase Iterro’s assets.

A memorandum of law filed in February said Iterro had developed shrimp farming technology, as well as chitosan, a product made from shrimp shells that can be used in medical applications, and a branded line of pet food and treats. However, the memorandum said Iterro did not attract the capital it needed to make its products commercially viable. The board of directors of Iterro filed a voluntary assignment for the benefit of creditors, the memorandum said.

The memorandum said Lighthouse’s investigation into Iterro’s assets and liabilities found more than 350 unsecured creditors or investors in Iterro, who either loaned or invested a total of over $69 million.

The memorandum said proposals for the company’s assets included a credit bid offer from Knochenmus Enterprises, LLP, for a price of $1,003,384.

On Feb. 25, the Madison Area Development Corporation filed an objection to the proposal to sell Iterro’s assets to Knochenmus Enterprises, court records said. By January 2025, MADC had loaned a total of more than $7.3 million to Iterro, the objection said.

The South Dakota Governor’s Office of Economic Development had granted the Madison Lake Area Improvement Corporation $5.5 million for construction of an Iterro shrimp production facility in Madison. However, construction of the facility never happened.

According to a notice filed Tuesday in Lyon County District Court, Lighthouse was withdrawing its motion seeking approval of a purchase of Iterro’s assets because of a “last minute offer” that was better than the previous purchase agreement. Lighthouse would seek a court date for approval of a new offer, according to court records.

Iterro, formerly called tru Shrimp, started out as a subsidiary of Marshall-based company Ralco. In 2015, tru Shrimp opened a research center in Balaton focused on developing methods of commercial indoor shrimp farming. Construction of a 12,000 square-foot facility for raising shrimp followed in 2017. However, plans to build a commercial production facility did not come to fruition for Iterro.

On Nov. 21, Knochenmus confirmed to the Independent that Iterro was closing its Balaton facility, but did not provide further details.