BOTTOM LINE Canntrust has officially called it quits on its fight to return to the markets as a legal cannabis grower in its current form. Reports Grizzle
Here’s the introduction to their piece
Canntrust is the first of the 10 largest cannabis license holders to go through a restructuring, but most certainly will not be the last.
What ultimately sank CannTrust were the class action lawsuits, not anything operational.
The wealth of evidence against prior management made this class-action a slam dunk in our opinion and it looks like CannTrust agreed.
Even with enough cash to potentially win their license back in 2021, current management must have realized lawsuits would just bankrupt the company eventually anyway so why bother.
Grizzle has covered the financial mismanagement of the cannabis industry extensively, and we don’t think Canntrust will be the only large LP to go belly up.
Lawsuits forced them to throw in the towel early, but there are at least a few more competitors slowly circling the drain.
DETAILS OF THE INSOLVENCY FILING
CannTrust Holdings Inc. (TSE: TRST, NYSE: CTST) announced that it has obtained an order from the Ontario Superior Court of Justice granting protection under the Companies’ Creditors Arrangement Act (CCAA).
The CCAA allows insolvent companies (they owe more than they have in cash) to restructure their debts.
This is the same as a bankruptcy proceeding in America and will most likely result in stockholders being completely wiped out.
Under this initial order, CannTrust will be allowed to:
- Complete the remainder of CannTrust’s remediation plan for its Vaughan Facility without disruption and submit the related evidence package to Health Canada;
- Continue to work with Health Canada to resolve any remaining Cannabis Act compliance issues, with a view towards reinstating CannTrust’s licenses for its Niagara and Vaughan facilities and restoring operations;
- Explore a CCAA plan of compromise or arrangement as a means for addressing the multiple putative class actions and other litigation brought against CannTrust in several jurisdictions, seeking to resolve all of the claims and contingent claims against the Company in a single forum; and
- Facilitate the completion of the Board of Directors’ review of strategic alternatives (the “Strategic Process”), including the solicitation, development and execution of any potential sale or other strategic transaction involving CannTrust, whether in addition to, or as an alternative to, a CCAA plan of compromise or arrangement.
The company still hopes it can find a way out of CCAA protection and return the company to commencing operations, although it remains uncertain if they will be able to do so.
Read full article at.
https://grizzle.com/canntrust-trst-first-large-lp-to-go-bankrupt/?ck_subscriber_id=489163782
