2690044 Ontario Inc. (“269”), an Ontario-based cannabis company, was placed under CCAA protection on August 12 on application by 1001180045 Ontario Inc. (“1001”) and Kanterra Science Inc., owed approximately $7.5 million and $1.6 million, respectively.

269 has approximately 50 full-time employees, 25 full-season, part-time employees, and 100 seasonal part-time employees and provides agricultural services, cultivating cannabis flowers across 50 acres of land in Melancthon, Ontario.

Its insolvency was driven by excessive secured debt against its Melancthon farm, with mortgage obligations of over $16 million, far exceeding the property’s value of $2.1 million, leading to defaults and a transfer of the farm to a nominee of the mortgagees (which included Kanterra) (the “Landowner”) under a forbearance agreement.

The Landowner retained the services of 269 under a management services agreement which provided a 25% profit share. Despite this, the company was unable to service its debts to its secured lenders, Savent Financial (owed approximately $6.6 million) and 2770641 Ontario Corp. (a royalty holder owed approximately $1.4 million), resulting in a severe liquidity crisis, imminent defaults under the forbearance agreement, and the risk of losing its excise license (which is in good standing but expires in October) and management services agreement, all of which necessitated urgent CCAA protection, DIP financing (to be provided by 1001 and Kanterra), and a court-supervised sales process to preserve going-concern value.

Crowe Soberman is the monitor.

Counsel is Blaney McMurtry for 1001 and Kanterra, Miller Thomson for the monitor, and Torkin Manes for Savent Financial.