Two Ontario-based cannabis companies are pursuing a Sale, Refinancing and Investment Solicitation Process (SISP) through court due to low cash flow.
Hamilton, Ontario-based cannabis companies Wayne Patrick Consumer Products Ltd. and WPCP Ltd. had their Notice of Intent proceedings continued under the CCAA on February 20.
In a court filing, the companies’ representative says the applicants are insolvent. They are balance sheet insolvent, unable to meet their liabilities as they become due, and are in a liquidity crisis.
The Applicants produce and distribute cannabis products in Ontario, Saskatchewan, Yukon, Northwest Territories, Nunavut, Newfoundland and Quebec. Both of their operations are run in a leased facility located in Ontario.
In their last six months, both companies have suffered losses due to high staff turnover, increased enforcement by the CRA, declining investor interest, higher interest rates, and decreased demand for cannabis products in a highly saturated and competitive market.
The company also says it has had to sell some of its inventory at a loss.
Wayne Patrick Ltd. owns 100% of Wayne Patrick Consumer Products Ltd. Wayne Patrick Ltd. is a private corporation incorporated under the OBCA. Its head office is also in Toronto.
On January 15, 2024, the Canada Revenue Agency (CRA) gave notice to WPCP that the CRA would not be renewing its license under the Excise Act when it expired on February 7, 2024.
A few weeks later, on February 7, 2024, two of the applicants, Wayne Patrick Ltd. and WPCP, each filed an urgent notice of intention to make a proposal under the Bankruptcy and Insolvency Act to prevent, among other things, the termination of the Excise License by CRA.
The Applicants have consolidated debt in excess of $5 million, including owing approximately $650,000 to CRA and $37,000 to Health Canada for annual licensing fees. They also have unpaid trade debt and other unsecured debt of approximately $2 million. The Applicants’ have missed the past two payrolls, and approximately $42,000 of payroll is in arrears.
In 2020, Wayne Patrick Ltd. acquired Beleave Kannabis Corp. through Beleave’s own CCAA proceeding, the facility that Wayne Patrick operated out of. It is about 10,000 sq ft, with multiple production rooms, including a hash production room, multi-use rooms, and a large vault for storage of finished goods. Their Health Canada licence is set to expire on May 11, 2028.
