Canadian pot company BC Craft files for bankruptcy protection as market shrinks

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Shares of BC Craft Supply Co. fell sharply on Wednesday after the Vancouver-based cannabis producer filed for protection from its creditors under Canada’s Bankruptcy and Insolvency Act.

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 Notice of Intent (NOI) to make a restructuring proposal in 2022, according to MJBiz Daily.

The Vancouver-based company has appointed Crow MacKay & Co. as trustee and said it will continue with day-to-day operations.

“The objective of filing the NOI is to restore the company’s financial stability, although there can be no guarantee that the company will be successful in obtaining additional financing or achieving its restructuring objectives,” said BC Craft Supply said in a statement. “If the company fails to meet its financing and restructuring targets, the company will likely go bankrupt.”

The NOI filing gives the company a 30-day reprieve from creditor collection efforts. The Supreme Court of British Columbia can extend the notice of intention for up to six months.

For the nine months ended June 30, the company reported a loss of approximately $1.9 million and revenue of approximately $636,000 with approximately $84,000 in cash.

BC Craft Supply’s move comes as cannabis sales in November fell 2.9% from the previous month to about $282.5 million. The latest figure marked the first monthly drop in sales since February 2021.

BC Craft Supply said in August it had “significant doubts” about its ability to meet its obligations as they come due.

BC Craft Supply comes after similar moves by Ascent Industries in December.

Meanwhile, HEXO from Hexo,
-2.41%

HEXO,
-3.08%
auditor questioned the viability of the business last year.

Read also : Cannabis company investors burned by stock market losses in 2021 even as pot trade grows

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