New Zealand medical cannabis company Cannasouth Limited has entered voluntary administration, a process that allows for an administrator to review and rearrange the financial affairs of insolvent or near-insolvent companies.
The company’s board made the decision in light of the challenges of securing additional funding and in the interest of shareholders and convertible note holders, according to a news release.
As the process unfolds, Cannasouth said it will continue to support its customers.
The appointment to voluntary administration was undertaken in consultation with the company’s note holders, who at the invitation of the board, nominated the administrators, Cannasouth said.
Ben Francis and Garry Whimp from Blacklock Rose Limited have been appointed joint administrators and are responsible for preparing a plan for the ongoing operations of the company, with the objective of meeting cash flow positive results.
Cannasouth said the administrators will undertake a detailed review of the company’s operations – with particular focus on identifying the profitable lines of the company’s products and services.
It is expected that the review by the voluntary administrators will take some time to complete while the parent company and its subsidiaries are scrutinized.
After that process has been completed, the administrators will seek financial support from shareholders and note holders to implement the plan.
Earlier this week, trading of Cannasouth shares (CBD) was halted on the New Zealand Stock Exchange at the company’s request after market regulator NZ RegCo said the company “has an urgent need to secure funding to remain solvent,” according to Australian news outlet Cannabiz.
