Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) has placed the company’s CBD business into receivership. This is typically a move to avoid bankruptcy. This was the determination from the company’s special committee of the Board of Directors.
Just a few weeks ago, Green Growth Brands closed down its CBD business, which was operating as the chain of Seventh Sense stores or kiosks. The company stated at that time that the stoppage in business was due to COVID19 and the closing of malls and retail areas. However, the company was struggling prior to the virus crisis.
The consent to the appointment of the receiver was filed on April 2, 2020, with the Franklin County Court of Common Pleas, in Franklin County, Ohio. Materials related to the filing can be accessed via the Franklin County Clerk of Courts electronic docket, which can be found at https://fcdcfcjs.co.franklin.oh.us/CaseInformationOnline/.
Technically, the CBD Business is operated by six of the company’s subsidiaries: Green Growth Brands LLC, GGB Beauty LLC, GGB Licenses LLC, Green Growth Brands Realty LLC, GGB Kiosks LLC, and GGB GN LLC (collectively, the “CBD Subsidiaries”). Each of the CBD Subsidiaries will be subject to the receivership order.
Green Growth said that aside from the CBD situation, “there remains a significant risk that the company will be unable to realize sufficient cost savings, find sufficient sources of financing for on-going working capital requirements and maturing debt and other liabilities or to negotiate extensions or alternate payment terms in respect of such debt.” Green Growth is trying to negotiate its obligations and has drawn down all the money available to it through All J’s Greenspace and Chiron Ventures.
All Js advanced approximately $1.5 million from its portion of the previously announced $52.3 million debenture repayment backstop commitment. The company said it is actively pursuing alternative financing sources but there can be no guarantee that any such financing will be consummated or if consummated on what terms.
Green Growth said it will continue to operate its cannabis business in Florida, Massachusetts, and Nevada through its subsidiaries Nevada Organic Remedies LLC, Henderson Organic Remedies LLC, Wellness Orchards of Nevada LLC, Just Healthy LLC, and Spring Oaks Greenhouses Inc. NOR and Henderson operates the The+Source dispensaries in the Las Vegas, Nevada region, and have recently started a delivery service in response to Nevada Governor Stephen Sisolak’s March 20, 2020 order limiting dispensary operations in the state. None of the MSO subsidiaries nor any of their respective assets will be subject to the receivership order.
In exclusive reporting by the Green Market Report, Green Growth attempted to lay off its workers without giving them back pay. Once the story was uncovered, the company was able to secure the money. On Friday, March 20, 2020, Green Growth Brands informed its laid-off workers that they would get paid. A spokesman for the company said, “At the time of the decision, the company remained uncertain of its ability to fund the payroll for the period ending today, March 20, 2020. As of this writing, I can confirm that such funding has been secured, that payroll has been initiated, and that all associates released will be paid for their time worked.”
The spokesman also confirmed that Horvath resigned voluntarily and would receive no severance pay. According to the company’s Management Information Circular, “If Mr. Horvath had been terminated by the Company without cause or had resigned from the Company for good reason as of June 30, 2019, Mr. Horvath would have been entitled to a payment of $2,550,000.”