Phoena Holdings Inc. plans to wind down its business and has obtained creditor protection for a second time.
Documents filed with a Toronto court show the Vaughan, Ont. cannabis company previously called CannTrust Holdings Inc. is insolvent and plans to liquidate its assets.
Ontario Superior Court Chief Justice Geoffrey Morawetz granted the company creditor protection last week.
The company sought creditor protection because it needs the "breathing room and stability" offered by a Companies' Creditors Arrangement Act proceeding, interim chief executive Cornelis Pieter Melissen said in an affidavit.
It is pursuing a wind down because it has been unable to revive its business and generate a profit since emerging from creditor protection in March 2022, after receiving $17 million in financing from a subsidiary of Netherlands-based private equity investment firm Kenzoll B.V.
Melissen founded Kenzoll and took the helm of Phoena when former chief executive Greg Guyatt stepped down in February.
Phoena's attempts to rebound under Guyatt were hampered by accusations that the company had grown cannabis in unlicensed rooms at a Fenwick, Ont. facility in 2018 and 2019.
An Ontario court, who heard a case brought by the Ontario Securities Commission, acquitted three of the company's former executives last year. Peter Aceto, Eric Paul and Mark Litwin had been charged with offences linked to the alleged unlicensed growing, but midway through the case the securities regulator revealed it no longer had a reasonable prospect of convicting the men.
Shortly after the alleged unlicensed growing was revealed, Phoena lost its cannabis licenses and was delisted from the Toronto Stock Exchange.
Phoena was able to get its licenses reissued eventually, but struggles still remained.
"The Phoena Group has been unable to recover CannTrust’s patient base that was lost during the period of time when CannTrust’s cannabis licenses were suspended," Melissen said.
Phoena had 68,000 registered patients in Canada as of March 2019, court records said.
"Further, since the suspension of those licenses in September 2019, the Canadian cannabis market has become increasingly competitive, with market share dominated by a handful of major corporations," Melissen said.
In its most recent full fiscal year, Phoena had a net loss of $24.8 million based on gross revenue of $13.2 million.
Phoena had a $317,000 loss on gross revenue of $1.2 million during the one-month period ending January 31.
This report by The Canadian Press was first published April 10, 2023.
Tara Deschamps, The Canadian Press