A recent acquisition and restructuring deal using Canadian insolvency law demonstrates that even struggling, deeply indebted marijuana producers can be revitalized, an important development at a time when many Canadian cannabis companies are floundering.
Trichome Financial Corp.’s successful stalking horse credit bid for cannabis producer James E. Wagner Cultivation Corp. (JWC) of Ontario might provide a blueprint for such deals in the future.
Through Canada’s Companies’ Creditors Arrangement Act (CCAA) – a federal law meant to help companies restructure and avoid bankruptcy – Trichome’s acquisition of JWC extinguished roughly 19 million Canadian dollars ($14.9 million) of the troubled producer’s liabilities.
The deal shows that such acquisitions can be achieved despite licensing-related complexities.
“This was an innovative transaction, so there was a lot of problem solving to be had,” Trichome CEO Michael Ruscetta told Marijuana Business Daily.
“Certainly, as more companies file (for creditor protection) and get resolved, it’s becoming easier,” he added.
“But (it is) a complicated, time-consuming and very expensive undertaking.”
Moreover, the JWC acquisition appears to have caught the eye of Israel-based IMC Cannabis Corp., which announced Dec. 30 that it was acquiring Trichome.
Trichome “has done an