By Steve Gelsi
BC Craft Supply Co. has lined up interim financing from Avro Capital Corp. after the Vancouver-based cannabis producer filed for protection from its creditors under Canada’s Bankruptcy and Insolvency Act.
BC Craft CEO Matt Watters said the company believes the financing “will sufficiently carry us through to the next steps of restructuring the company and continuing as a viable business moving forward.”
BC Craft marks the first Canadian cannabis company to file a notice of intention (NOI) to make a restructuring proposal in 2022, according to MJBiz Daily.
Last week, the Vancouver-based company named Crow MacKay & Co. as trustee and said it would continue day-to-day operations.
“The objective of filing the NOI is to regain the company’s financial footing although there can be no guarantee that the company will be successful in securing further financing or achieving its restructuring objectives,” BC Craft Supply said in a statement. “Failure by the company to achieve its financing and restructuring goals will likely result in the company becoming bankrupt.”
The NOI filing gives the company a 30-day stay against collection efforts by creditors. The Supreme Court of British Columbia may extend the NOI for up to six months.
For the nine months ended June 30, the company reported a loss of about $1.9 million and revenue of about $636,000 with about $84,000 of cash on hand.
BC Craft Supply in August said is had “significant doubts” of its ability to meet its obligations as they come due.
BC Craft Supply comes after similar moves by Ascent Industries in December.
Meanwhile, Hexo’s /zigman2/quotes/206508254/composite HEXO -3.58% /zigman2/quotes/200008967/delayed CA:HEXO -4.62% auditor questioned the company’s viability last year . Hexo said Monday it was notified it could lose its Nasdaq listing because its stock traded below $1 for 30 straight trading days. The company has 180 calendar days to regain compliance or face the risk of being delisted.
The move by BC Craft Supply comes as November cannabis sales in Canada fell 2.9% over the previous month to about $282.5 million. The latest figure marked the first monthly sales drop since February, 2021.