News broke yesterday which will affect quite a few people in the Oregon cannabis industry. Chalice Brands Ltd. (CSA: CHAL) obtained a court order in Ontario, Canada (“Initial Order”) which grants the company and its affiliates protection (a “stay”) from creditors. At least temporarily. The Initial Order is here and the Chalice press release is here. Chalice also filed an Oregon Circuit Court complaint on May 22 (“Complaint”), where it sued five of its own subsidiaries (the “Subsidiaries”) to drive them into receivership locally. If you’d like a copy of the Complaint, email me here.
I’m not an insolvency lawyer, so I won’t delve into issues of how the Initial Order from a Canadian court could be binding with respect to the Subsidiaries, which are Oregon companies. My guess is the Complaint was filed to address concern that Oregon creditors won’t respect the Ontario court’s rulings– including the stay. Appointing a local receiver could also expedite the disposition of all these local creditor claims.
I will note that the Initial Order, underlying pleadings, and Complaint make for interesting reading. The Complaint for example alleges that:
the Subsidiaries owe Chalice over $35 million in intercompany debt (while admitting “these numbers
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