Sunniva has received an initial creditor-protection order from the Supreme Court of British Columbia as the Vancouver-based marijuana firm pursues restructuring.
The cross-border firm made the announcement in a news release on Monday, joining a number of troubled Canadian cannabis producers seeking creditor protection this year.
Sunniva was previously focused on building a cultivation facility in British Columbia and operated medical cannabis clinics in western Canada but later focused on doing business in California, according to a petition to the court.
The company has unsecured debts of more than 58 million Canadian dollars ($44.2 million) “that are due or past due,” the petition said, and also “(faces) numerous lawsuits.”
Sunniva plans to use the creditor-protection process to:
- Resolve disputed claims.
- Liquidate its remaining Canadian assets.
- “Advance its interest in assets located in California.”
- Establish a plan with creditors “with a view to having Sunniva emerge from these proceedings on more stable financial footing in order to continue to advance and develop its assets in California.”
The company’s U.S. subsidiary has a leasehold interest in a California cannabis facility that is currently under construction and is 85% complete, but “construction has stalled due to cost overruns, the financial distress of the initial developer and disputes between the initial developer and (Sunniva).”
Sunniva believes the finished facility “will have significant revenue and profit potential.”
The company’s California campus had been beset with cost overruns, regulatory filings show. The estimated project budget more than doubled to $120 million by the end of 2019. The original estimate was $54 million.
In August, Sunniva sold off property in Okanagan Falls, B.C., for CA$3.2 million.
Some of the proceeds of that sale went to the CEO and independent directors, who “had deferred wages and director fees for a significant period.”
Those payments amounted to CA$256,000 and CA$190,000, respectively.
Shares in Sunniva trade on the Canadian Securities Exchange as SNN, but trading has been suspended since June.
Documents related to the creditor protection proceedings are available from monitor Alvarez & Marsal.