The shares in BC Craft Supply Co. fell sharply on Wednesday after the Vancouver-based cannabis producer applied for protection from its creditors under Canada’s bankruptcy and insolvency law.
BC Craft Supply CRFTF CA: CRFT OTC shares fell 36% to trade at 20 cents on Wednesday.
It is the first Canadian cannabis company to file a letter of intent (NOI) to put forward a restructuring proposal in 2022, according to the MJBiz Daily.
The Vancouver-based firm named Crow MacKay & Co. as trustee and said it would continue its day-to-day operations.
“The goal of filing NOI is to regain the company’s financial foothold, although there can be no guarantee that the company will be successful in securing additional financing or achieving its restructuring goals,” BC Craft Supply said in a statement. “If the company does not achieve its financing and restructuring goals, it is likely to result in the company going bankrupt.”
The NOI application gives the company a 30-day stay against creditors’ collection efforts. The Supreme Court of British Columbia can extend the NOI for up to six months.
For the nine months ending June 30, the company reported a loss of about $ 1.9 million and a turnover of about $ 636,000 with about $ 84,000 in cash on hand.
The move by BC Craft Supply comes as cannabis sales in November fell 2.9% over the previous month to around $ 282.5 million. The latest figure marked the first monthly sales decline since February 2021.
BC Craft Supply said in August that they had “significant doubts” about its ability to meet its obligations when they fall due.
BC Craft Supply is coming after similar initiatives from Ascent Industries in December.
Meanwhile, Hexo’s HEXO,
auditor questioned the company’s viability last year.
Also read: Investors in cannabis companies burned by stock market losses in 2021, even though the pot business grows