Toronto Cannabis Co. Trees Seeks Creditor Protection, Here's What You Need To Know

Trees Corporation TREE recently received an order for creditor protection from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act (CCAA).

The company's subsidiaries that fall under this protection are Ontario Cannabis Holdings Corp., Miraculo Inc., 2707461 Ontario Ltd., OCH Ontario Consulting Corp., and 11819496 Canada Inc.

The Toronto-based company said the Trees Group has been actively pursuing additional financing to raise capital to fund its operations and engaged a financial advisor to assist the Trees Group with reviewing strategic options, including financing options.

The company said the directors of the Trees Group determined that it was in the company's best interest to file an application for creditor protection under the CCAA.

The initial order includes:

• A stay of proceedings in favor of the Trees Group; and
• The appointment of Ernst & Young Inc. as the monitor of the Trees Group.

Why It Matters

The Trees Group sought creditor protection under the CCAA to receive a stay of proceedings that will allow the group to work with the monitor to facilitate the development of an orderly process designed to streamline its operations and conduct a court-supervised sales process to obtain a going concern solution for its operations and maximize the value of the Trees Group’s assets for the benefit of its stakeholders.

What's Next

The board of directors of the Trees Group will remain in place and management will remain responsible for the day-to-day operations under the general oversight of the monitor.

Cboe Canada is expected to place the company under delisting review.

In the meantime, Trees Corporation entered into a business combination agreement dated July 12, 2023, with 420 Investments Ltd., under which the company and 420 agreed to amalgamate, constituting a reverse takeover by 420 under the policies of Cboe Canada, the new business name of the NEO Exchange. However, that deal recently fell through.

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