Update on Current Court-Supervised Cannabis Industry Restructurings
Updated: Apr 9, 2020
In February 2020 we posted a summary of three ongoing court-supervised cannabis company restructurings. In early March we added a fourth proceeding and provided an update on the three others. (see the original post here). Late March we updated this post to include what was by then five ongoing cannabis industry-related court-supervised restructuring proceedings.
As of today (April 3, 2020), there eight (and we have added some detail on a ninth for historical completeness).
Below is a brief summary of the status of each one with links to the active dockets. We will use this post to provide frequent updates on all court-supervised restructurings of companies in the cannabis, cannabinoid, and hemp industry. We are monitoring each one and will provide key updates here, on our Twitter stream (@restructuradvs), and in our LinkedIn Cannabis Industry Restructuring & Turnaround Group.
On February, 13, 2020, Invictus MD Strategies Corp., Greener Pastures MD Ltd., Acreage Pharms Ltd. and 2015059 Alberta Ltd. (collectively the "Invictus Group“) sought and obtained an Initial Order of the Supreme Court of British Columbia pursuant to the Companies’ Creditors Arrangement Act ("CCAA"). PricewaterhouseCoopers Inc. Licensed Insolvency Trustee was appointed as Monitor for the CCAA Proceedings.
It is interesting to note that the Invictus Group was able to renew their license with Health Canada and continues to operate their facility despite being under CCAA.
There is currently a stay of proceeding in place effective to May 29, 2020. Dip lending has been provided, a KERP is in place, and a SISP is underway. March 19 was the deadline for identifying potential known bidders. April 24 is the Phase 1 bid deadline. May 19 is the Phase 2 bid deadline.
On January 24, 2020, Pinnacle, Inc., Crawford Sales, Inc., and Integrity / Architecture PLLC filed an involuntary chapter 11 petition under title 11 of the United States Code (the “Bankruptcy Code”) against GenCanna Global USA, Inc. On February, 6, 2020, GenCanna Global USA, Inc. consented to the involuntary petition and on February 5, 2020 two debtor affiliates, GenCanna Global, Inc. and Hemp Kentucky, LLC filed their own voluntary chapter 11 petitions under the Bankruptcy Code. As a result of these petitions the Debtors consented to, or commenced, the current chapter 11 bankruptcy cases (the “Cases”). The Cases will be jointly administered for procedural purposes meaning all pleadings will be maintained on the case docket for In re GenCanna Global USA, Inc., Chapter 11 Case No. 20-50133-grs (the "Main Case Docket").
On March 6, 2020, the Court entered the order approving the Debtors’ Motion for Entry of an Order (I) Approving Bidding Procedures In Connection With the Debtors’ Bidding Process; (Ii) Approving the Transaction Ultimately Selected as the Highest and Best Alternative Through the Bidding Process, Including a Possible Sale of Assets Free and Clear Of Liens, Claims and Encumbrances; and (Iii) Granting Related Relief.
A meeting of creditors was held March 9th. The deadline for filing proofs of claim has yet to be established. April 17 is the bid deadline April 20 is the Auction Date, April 21 the deadline for objecting to the Bid Transaction.
On December 2, 2019 (the “Filing Date”), Wayland Group Corp., (“Wayland”), Maricann Inc. (“Maricann”) and Nanoleaf Technologies Inc. (“Nanoleaf”, and collectively with Wayland and Maricann the “Companies” or the “Applicants”) applied for and received an order (the “Initial Order”) for protection pursuant to the Companies’ Creditors Arrangement Act (“CCAA”), R.S.C.1985, c.C-36, as amended, from the Ontario Superior Court of Justice Commercial List (the “Court”). The Initial Order was amended on December 4, 2019 (the “Amended and Restated Initial Order”). The Amended and Restated Initial Order was amended on December 16, 2019 (the “Second Amended and Restated Initial Order”). The Second Amended and Restated Initial Order includes among other things, a stay of proceedings against the Companies, and the appointment of PricewaterhouseCoopers Inc., LIT as monitor of the Applicants (“PwC” or the “Monitor”).
On February 12, 2020, the Court issued the Approval and Vesting Order, which, approved a couple of key transactions, authorized the postponement of Wayland’s annual meeting of shareholders until further order of the Court, etc. March 13 was the Phase 2 bid deadline so the Monitor is now working with the Company to "explore potential transactions and identify a successful bidder". On March 31 the court extended the Stay Period until April 17.
AgMedica Bioscience Inc., 2472602 Ontario Inc., 2642466 Ontario Inc.,8895309 Canada Inc., Wellworth Health Corp., 8050678 Canada Inc., 8326851 Canada Inc., Tavivat Naturals Inc., World Wide Beverage Innovations Inc., Unique Beverages, (USA) Inc. and Eseela Inc
On December 2, 2019, AgMedica Bioscience Inc. (“AgMedica”) and certain of its subsidiaries (collectively, the “Applicants”) were granted an initial order (as amended or amended and restated from time to time, the “Initial Order”) under the Companies’ Creditors Arrangement Act (the “CCAA” and the “CCAA Proceedings”) by the Ontario Superior Court of Justice (the “Court”). All the legal entities comprising the Applicants are privately held companies incorporated under the laws of Ontario or Canada, with the sole exception of Unique Beverages (USA) Inc., a dormant corporation incorporated under the laws of Delaware.
On the 9th of March the court extended the Stay Period to June 30th,
The court-approved SISP is now underway. The claims deadline was March 16. The phase 1 bid deadline was March 20. The Phase 2 bid deadline is April 17. A proposed transaction to sell one of their non-core assets has recently been approved.
On March 19, 2020, the Pure Global Cannabis group of companies obtained an order on March 19, 2020 from the Ontario Superior Court of Justice (Commercial List)) granting it protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA") with an initial stay of proceedings until March 27th. Presumably this has been extended by the docket has not been update by E&Y so we don't know until when.
On March 31, 2020, the CannTrust group of companies obtained an order from the Ontario Superior Court of Justice (Commercial List)) granting it protection under the Companies' Creditors Arrangement Act (Canada) ("CCAA") with an initial stay of proceedings until April 10th.
CannTrust holds significant equity interests in O Cannabis We Stand on Guard For Thee Corporation, Cannatrek Ltd., Elmcliffe Investments [No. 2] Inc. and Cannabis Coffee and Tea Pod Company Ltd. (the “Affected Parties”). As a result of CannTrust’s relationship with the Affected Parties, there are certain agreements that may have been entered between CannTrust, one or more Affected Parties and third parties that may trigger defaults as a result of the Applicants’ insolvency proceedings. As such, the Applicants have requested a limited stay of proceedings to be extended to the Affected Parties with respect to the making or filing of these proceedings or any allegation, admission or evidence in these proceedings. The Proposed Monitor is of the view that the limited stay should be extended to the Affected Parties so that there is no risk to disruption to their businesses solely due to the CCAA Application.
On April 1, 2020 James E. Wagner Cultivation Corporation (“JWC”), James E. Wagner Cultivation Ltd. (“JWCL”), JWC 1 Ltd. (“JWC1”), JWC 2 Ltd. (“JWC2”), JWC Supply Ltd. (“JWCS”) and GrowthStorm Inc. (“GrowthStorm”) (collectively the “Applicants” and each an “Applicant”) obtained an order from the Ontario Superior Court of Justice (Commercial List) (the “Court”) under the Companies’ Creditors Arrangement Act, R.S.C. 1985, c. C-36, as amended (the “CCAA”), for an initial order (the “Initial Order”) granting the Applicants protection under the CCAA and appointing KSV as the CCAA monitor in these proceedings (“Monitor”).
On April 2, 2020, True Leaf Brands, Inc., (CSE: MJ) (OTCQX: TRLFF) (FSE: TLA), True Leaf Pet, Inc., True Leaf Investment Corp. and True Leaf Cannabis, Inc. ("True Leaf" or the "Company") commenced restructuring proceedings by obtaining creditor protection from the B.C. Supreme Court by filing Notices of Intention to Make a Proposal (the "NOIs") pursuant to Section 50.4(1) of the Bankruptcy and Insolvency Act (Canada). FTI Consulting Canada Inc. was named as the Licensed Insolvency Trustee under the NOIs.
Note that while the following case (the first cannabis company to file for creditor protection under CCAA) is technically no longer active, for the completeness of the record here is the basic summary:
Ascent Industries Corp., ("Ascent"), Agrima Botanicals Corp. ("Agrima"), Agrima Scientific Corp. ("Agrima Scientific"), Bloom Holdings Ltd. ("Bloom Holdings"), Bloom Meadows Corp. ("Bloom Meadows"), Pinecone Products Ltd. ("Pinecone"), West Fork Holdings NV Inc. ("West Fork NV" and collectively the "Ascent Group")
On March 1, 2019, the Supreme Court of British Columbia granted Ascent Industries Corp. ("Ascent'), Agrima Botanicals Corp. ("Agrima"), Agrima Scientific Corp. ("Agrima Scientific"), Bloom Holdings Ltd. ("Bloom Holdings"), Bloom Meadows Corp. ("Bloom Meadows"), Pinecone Products Ltd. ("Pinecone"), West Fork Holdings NV Inc. ("West Fork NV") and collectively, the "Ascent Group" relief under the Companies' Creditors Arrangement Act (Canada) (the "CCAA").
After running a SISP, some of the assets of the company were sold. On March 6, 2020, an application was made to extend the Stay Period. This application was denied by the Court citing the Company's failure to comply with the terms of the order. This means the company no longer enjoys protection under the CCAA from creditors and litigants.