CannTrust plans potential liquidation of its business due to cash flow issues

The federally regulated Canadian cannabis producer said it was failing to meet minimum earnings before interest, taxes, depreciation and amortization under its debtor-in-use loan and said the lender had not agreed to forgo the loan. fault. CannTrust Holdings Inc. on Thursday warned that it does not have the cash flow to operate any longer and that it is planning an orderly liquidation of the company if it fails to complete a funding or strategic transaction.

CannTrust said it has made progress, including getting its licenses reinstated from Health Canada, restructuring its operations and resuming production, but said it continued to face challenges.

The company said the lender continues to advance funds under the facility.

The company said it implemented its Amended and Restated Fourth Plan of Compromise, Arrangement and Reorganization, also known as the CCAA Plan, after receiving approval from the Ontario Superior Court of Justice in mid-July, as well as class action settlement in the United States. by the U.S. District Court for the Southern District of New York in early December.

As part of the plan, President Robert Marcovitch, along with directors Mitchell Sanders, Mark Dawber and Shawna Page, have resigned.

The company has contributed C $ 50 million (US $ 39.2 million) to class action settlements and C $ 2.7 million to various claims in its CCAA proceedings.

Due to the challenges, the company said it does not have sufficient liquidity to operate beyond the short term. CannTrust said it is in talks with potential investors and strategic partners and is developing a reduction plan if necessary.

Write to Adriano Marchese at adr[email protected]

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