Embattled Canadian cannabis producer CannTrust Holdings on Wednesday announced a restructuring support agreement that will pave the way for the company to settle shareholder lawsuits as it restructures.
Under the agreement, shareholders’ litigation against CannTrust in both Canada and the United States “will be settled as part of a broader restructuring of the company” under Canada’s Companies’ Creditors Arrangement Act (CCAA).
The agreement “contemplates the resolution … of all claims against CannTrust” and other defendants named in the securities lawsuits, according to a news release.
The arrangement will require CannTrust to pay 50 million Canadian dollars ($39.6 million) “into a trust that will be established for the benefit of the securities claimants.”
The Vaughan, Ontario-based company said it has roughly CA$78 million cash on hand.
CannTrust was granted creditor protection under the CCAA last March in the wake of a major industry scandal in which the company’s federal cannabis licenses were suspended after it was caught growing cannabis in unlicensed areas.
CannTrust’s licenses have since been restored and the company started selling cannabis again, but the producer’s troubles are far from over.
“Today’s announcement represents a significant milestone towards the resolution of substantially all of the civil litigation claims that were filed against CannTrust following the company’s non-compliance with certain Health Canada regulations,” CannTrust CEO Greg Guyatt said in the news release.
“Although much work remains to conclude the matters contemplated by the (restructuring support agreement), I am pleased that, in addition to relaunching our medical and recreational businesses, we are also making further tangible progress to exit from the CCAA and put CannTrust in a position to be a successful player in the cannabis industry.”
CannTrust shares were delisted from the New York Stock Exchange last April.