CannTrust Plans for potential Wind-down for business amid Liquidity issues

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CannTrust Plans for potential Wind-down for business amid Liquidity issues

The Canadian federally-regulated cannabis producer said it is in default of the minimum earnings before interest, taxes, depreciation and amortization covenant under its debtor-in-possession loan and said the lender hasn’t agreed to waive the default.

CannTrust said that it has made progress, including obtaining reinstatement of its licenses from Health Canada, in restructuring its operations and resuming production, but said it continues to face challenges.

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

The company said it implemented its fourth amended and restated plan of compromise, arrangement and reorganization, also known as its CCAA plan, after receiving approval by the Ontario Superior Court of Justice in mid-July, as well as that of the U.S. class action settlement by the U.S. District Court Southern District of New York in early December.

Story Highlights

  • CannTrust Holdings Inc. on Thursday warned it doesn’t have the necessary liquidity to operate for much longer and that it is planning an orderly wind-down of the company if it can’t finalize a financing or strategic transaction.

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

The company has contributed 50 million Canadian dollars (US$39.2 million) toward class action settlements and C$2.7 million toward various claims under its CCAA proceedings.

Due to the challenges, the company said it doesn’t have sufficient liquidity to operate beyond the near term. CannTrust said it is in discussions with potential investors and strategic partners, and is developing a wind-down plan if found to be necessary.

Write to Adriano Marchese at adriano.marchese@wsj.com