A marijuana growing facility just east of Chatham is in financial trouble and could be finished before it even started.
Curative Cannabis at 10078 Longwoods Rd. owes Auxly Cannabis Group of Toronto $21.2 million for construction costs, interest, and professional fees.
A Toronto court has ordered Auxly to secure Curative's assets and shares, meaning Auxly now owns and controls Curative Cannabis in Chatham. The 95 common shares were owned by Curative CEO David Shpilt and Chief Operating Officer Scott Fitzgerald.
"This court orders and declares that pursuant to section 65(6.1) of the PPSA, Auxly is entitled to the Share Collateral," stated court documents dated November 27, 2019.
Court documents dated November 25, 2019 stated Curative Cannabis defaulted on its debt on August 5, 2019 and the shares were previously offered as security for all amounts owing to Auxly. Curative objected to Auxly securing the shares because their fair market value exceeded the debt. However, the judge disagreed and said the uncontested evidence before the court is that Auxly has "first-ranking interest" in the shares and an independent, experienced valuator submitted the fair market value of the shares is less than the debt.
Curative Cannabis was in the process of building a facility and getting a licence when it defaulted on its debt. The facility was to be open by the end of 2019 but Auxly issued a foreclosure notice on August 29, 2019.
According to court documents, Curative notified Auxly it had secured more financing to repay the debt and promised to pay it by November 15, 2019 but the funds never came through.
A. Farber and Partners have been appointed as receiver by the court.
It's not the first time a marijuana production company in Chatham has been on the ropes. AgMedica Bioscience Inc. asked for and was granted federal credit assistance in December to keep its business up and running. In a statement, AgMedica said it was around $5 million in debt.