Vancouver, British Columbia-based BC Craft Supply Co. filed for temporary protection from creditors under Canada’s Bankruptcy and Insolvency Act while the craft cannabis firm pursues restructuring.
The filing imposes an automatic 30-day stay of proceedings, protecting the company from any claims of creditors while it pursues restructuring, with Vancouver-based Crowe MacKay & Co. acting as trustee.
BC Craft Supply warned investors in August of “significant doubts as to the ability of the company to meet its obligations as they fall due.”
The company said day-to-day operations will continue throughout the process as it looks to restructure and put forward a proposal to creditors.
The objective of the filing, per the notice, “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.”
Failure to achieve the financing and restructuring goals will likely result in bankruptcy, the company warned.
According to the most recent financials, BC Craft Supply lost 2.4 million Canadian dollars ($1.9 million) for the nine months ended June 30, 2021.
That left the company with only CA$105,801 in cash at the time. Revenue in the same period was CA$801,276.
In 2019 and 2020, BC Craft Supply lost CA$54.2 million and CA$35.6 million, respectively.
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BC Craft Supply is the first Canadian cannabis company to seek creditor protection this year.
A number of companies have sought creditor protection as competition in the cannabis industry intensifies.
In December, British Columbia-based Ascent Industries was granted creditor protection by the Supreme Court of British Columbia.
In 2020, Kitchener, Ontario-based cannabis cultivator James E. Wagner Cultivation (JWC) entered creditor protection as part of a debtor-in-possession loan deal with cannabis sector lender Trichome Financial.
The Toronto-based lender ended up acquiring JWC’s assets, possibly providing a blueprint for reviving struggling, deeply indebted marijuana producers.
Shares of BC Craft Supply are traded on the Canadian Stock Exchange under the ticker symbol CRFT.
Matt Lamers can be reached at mattl@mjbizdaily.com.
