Delta 9 Cannabis Inc. (TSX: DN) et al., CCAA

Delta 9 Cannabis Inc. (TSX: DN) et al., a group of Alberta, Saskatchewan and Manitoba-based cannabis retailers and a Winnipeg-based cannabis producer and distributor, obtained CCAA protection on July 15.

The companies have suffered losses in recent years due to a number of factors, including intense competition and an over-supply of cannabis products leading to significant price compression and the sale of inventory at a loss; the impact of the illicit supply of cannabis; and the burdensome costs associated with the regulatory regime in the industry.

Prior to the CCAA filing, the companies faced imminent enforcement on their senior debt obligations.

SNDL Inc., the subordinate secured debenture holder, recently acquired the senior secured debt from ConnectFirst Credit Union. Demand notices were issued on May 21 (subordinate) and July 12 (senior).

In conjunction with the CCAA filing, the Delta 9 group entered into a binding term sheet with 2759054 Ontario Inc. o/a The FIKA Company to act as plan sponsor to the CCAA proceedings, proposing to acquire the cannabis retail store business and the logistics and distribution business, while facilitating a SISP for the assets of the licensed cannabis production business.

A&M is the monitor.

Counsel is MLT Aikins for Delta 9, BD&P for the monitor, Miller Thomson for FIKA, and McCarthy Tétrault for SNDL.