Canadian cannabis producer Sugarbud Craft Growers Corp. is seeking creditor protection.
Calgary, Alberta-based Sugarbud “expects that it is likely to default on several material debtor agreements due to ongoing liquidity constraints,” the company said in a Monday news release.
Sugarbud and its subsidiaries have filed notices of intention to make a proposal under Canada’s Bankruptcy and Insolvency Act (BIA), then potentially convert those BIA proceedings into Companies’ Creditors Arrangement Act (CCAA) proceedings “should management determine that CCAA proceedings would be more appropriate.”
The notices of intention allow for a temporary stay of proceedings against Sugarbud as it “(pursues) available options to maximize the company’s value for stakeholders.”
Also, Sugarbud Stephen Martin resigned as board director and Chris Moulson as chief financial officer.
John Kondrosky resigned in August as president, CEO and board director, alongside director Janice Comeau.
Sugarbud delayed reporting its second-quarter results earlier this month.
The subsequent quarterly filing revealed that lender Connect First Credit Union served Sugarbud with demand notices after the quarter ended, according to the filing.
CCAA proceedings have become common for distressed Canadian cannabis companies, with firms such as Zenabis, Choom, Eve & Co., and others receiving creditor protection over the past year.
Details of Sugarbud’s BIA filings can be found on the website of proposal trustee Alvarez & Marsal.
Shares of Sugarbud trade as SUGR on the TSX Venture Exchange.
