True Leaf seeks creditor protection
Published on April 3, 2020 by David Wylie
I bought one product from True Leaf.
It was a pump bottle of Hip + Joint hemp oil, purchased for my 16-year-old Shih Tzu to help him get around with less pain.
The product now seems symbolic of the North Okanagan company itself: in concept it’s great, but in execution it failed.
Within the first week, the pump broke. I had to unscrew the top to dribble it onto his food, and the grainy mustard-coloured goop would down the side making an annoying mess. I got some on my pajamas, staining them. It would also discolour my dog’s face when he ate it, and he would rub his chin on the carpet.
After one too many frustrations, the $40 bottle now sits half full and gathering dust on a shelf.
True Leaf appears to be suffering the same fate. The once optimistic company, which would send out press releases practically every few days boasting new international retail deals, admitted this week it’s seeking creditor protection.
Despite its recent record financial quarter, the company has clearly fallen on tough times.
Last year, it listed its “Cannabis Campus” for sale for $7.25 million. The 40-acre industrial-zoned property in the village of Lumby is set up for pot production, and True Leaf has received its cultivation, processing and sale for medical purposes licenses through Health Canada – all included in the sale. The facilities are incomplete, but have the potential for an estimated 6,400 kilograms of dried cannabis flower per year.
Then on Thursday, the company admitted that “after careful consideration of all available alternatives, it has commenced restructuring proceedings and is seeking creditor protection by filing a Notice of Intention to make a proposal under the Bankruptcy and Insolvency Act (Canada).”
The news came after True Leaf received a formal default notice from lender Lind Asset Management XV ordering the company to “remedy all breaches” under its credit agreement, the main breach being the immediate payment of $250,000 which was due on March 21.
True Leaf wants a 30-day stay of proceedings that will protect it from creditors, “while it works to restructure its indebtedness and to evaluate its options to improve the financial health of the Company and ensure its ongoing success.”
The 30-day period could be extended by the Supreme Court of British Columbia.
It’s not good news for investors who have seen True Leaf stock tumble from a high of 1.77 in 2018 to practically worthless – 0.025.
True Leaf said it will release more information on or before May 1, when the initial 30-day period expires to provide an update.
Still, there are no guarantees True Leaf can be saved.
“Failure by True Leaf to successfully restructure its indebtedness through an approved proposal will result in the company becoming bankrupt,” said the statement.
One bit of good news for the company is that pet supplies are generally listed as essential services in this ongoing pandemic. So people can continue to purchase True Leaf products. However, the question remains: do they want to?