March 25, 2022
Eve & Co Incorporated, Natural Medco Ltd. and Eve & Co International Holdings Ltd., Strathroy, Ontario-based cannabis companies, were granted CCAA protection on March 25. Natural Medco Ltd. ("NMC") owns approximately 32 acres of land in Strathroy, Ontario, on which the Eve Group operates one of the largest cannabis cultivation and processing facilities in the world at 1,000,000 square feet (“Facility”). While NMC is licensed to cultivate and sell to other licensed cannabis producers cannabis for medicinal use, it is still not licensed to sell medicinal cannabis directly to patients in Canada. In anticipation of significant increases in sales volumes, including on account of anticipated supply agreements being negotiated with foreign importers of medicinal cannabis, the Eve Group undertook a 780,000 square foot expansion of the Facility in mid-2018 at a cost of $42 million. However, as a result of numerous external factors, the Eve Group’s utilization of the expanded, 1,000,000 square foot Facility has never been above 20% - a level of production that does not cover the debt service costs of the expansion. In addition, the companies' counterparties under the supply agreements failed to meet their minimum order obligations under the agreements. A sale process was approved on April 1. BDO was appointed monitor. Counsel is Miller Thomson for the companies, TGF for BDO as monitor, Harrison Pensa for RBC. and Aird & Berlis for DIP lender Deans Knight.
By Dina Milivojevic