Canadian cannabis edibles manufacturer, Indiva Limited, announced this week that it has officially received creditor protection ‘in order to restructure (its) business and financial affairs’.
In a press release published yesterday (June 13), the embattled company announced that the Ontario Superior Court of Justice had granted the initial order under the Comapnies Creditors’ Arrangement Act (CCAA)
This is a process reserved for larger corporations that owe their creditors over $5m and are facing financial difficulty, allowing the company protection from its creditors while it develops a restructuring plan, which can involve selling assets or raising new capital,
Indiva says it now intends to seek court approval to launch a sale and investment process for its business and assets.
A key creditor and significant stakeholder in Indiva, SNDL, intends to ‘acquire substantially all of the business and assets of the Indiva Group, by issuing an initial ‘stalking horse’ bid, which will set the bottom price for the bidding process to begin.
In early June, 2024, Indiva announced that its liabilities from a strategic investment of $22m from SNDL in 2021 had been extended, after the company paid back $2m in April, 2024. In their most recent quarterly report, Indiva announced a net loss of $1.8 million.
The company cited ‘the fragmentation of the cannabis industry, financial underperformance and pressures resulting from obligations owing to creditors’, for its financial woes.
“After careful consideration of all available alternatives including undertaking a strategic review which was unsuccessful in identifying a suitable acquirer or raising sufficient capital to fund certain liabilities, the board of directors of each member of the Indiva Group determined that it was in the best interest of the Indiva Group and its stakeholders to seek creditor protection under the CCAA,” it said in a its release.
“The business operations of the Indiva Group will not be interrupted as a result of the CCAA proceedings. It is expected that the Indiva Group will emerge from creditor protection as a stronger company with a healthier balance sheet.”
