DionyMed Brands (CSE: DYME), a Vancouver, British Columbia-based cannabis company, was placed in receivership on October 29 on application by GLAS Americas, owed, together with certain other lenders, approximately $24.8 million. The company generated its revenue primarily in the United States, selling a portfolio of wholly-owned and third-party brands to over 800 retail dispensaries in California, Oregon and Nevada, as well as providing a direct-to-consumer cannabis delivery service. Despite strong growth, the company was unprofitable; in the first 6 months of the year it recorded a negative operating cash flow of $17.2 million on $34.4 million of revenue. Efforts in recent months to raise additional capital were unsuccessful and the company's secured lenders were unwilling to provide additional funds without a court-supervised process geared to obtaining a permanent solution to the company's capital structure and indebtedness. FTI was appointed receiver. Counsel is Dentons for the applicant, Bennett Jones for the receiver, Stikeman Elliott for SP1 Credit Fund and Blakes for an ad hoc group of bondholders.
Curative Cannabis, an early stage cannabis cultivation company that is in the process of building a facility in Chatham, Ontario, was placed in receivership on September 19 on application by Auxly Cannabis Group, owed approximately $16.2 million. The company's facility is approximately 90% complete and it has submitted its application for a cultivation license. The company's loan from Auxly, which was used to finance the acquisition of the Chatham land and the construction of the facility, matured in August 2019 and the company has been unable to refinance the loan or otherwise put forward a proposal acceptable to Auxly. Farber was appointed receiver. Counsel is Bennett Jones for the applicant and Siskinds for the company.
Ascent Industries (CSE:ASNT), which is in the business of cultivating, producing, processing, developing and distributing cannabis and cannabis-based products in British Columbia and Nevada, US, filed for protection under the CCAA on March 1, owing approximately $7.0MM to Gulf Bridge, a Cayman Islands-based company. Since cannabis is a regulated product, the company's ability to generate revenue is largely dependent on its holding the necessary licences. In September 2018, Health Canada partially suspended the company's cannabis licences, which are held by its subsidiary Agrima Botanicals, as a result of Agrima's failure to meet certain compliance requirements. In November 2018, Health Canada further notified Agrima of its intention to revoke its licences for alleged contraventions of the Cannabis Act. Due to Health Canada's suspension and proposed revocation of the company's cannabis licences, the company is no longer able to legally produce or distribute cannabis in Canada. This has decimated the company's ability to generate positive cash flow, and is the primary cause of its financial difficulties and corresponding insolvency. In addition, the suspension and proposed revocation of the licences has made it virtually impossible for the company to raise money through the capital markets to resolve its liquidity problems. The company engaged Clarus Securities to assist it in conducting a sale and investment solicitation process for its business. Although the company was ultimately unable to conclude a sale transaction, a number of potential purchasers remain interested. EY was appointed monitor. Counsel is BLG for the company and Fasken for Gulf Bridge.