(Bloomberg) -- CannTrust Holdings Inc., the troubled Canadian cannabis producer whose former executives have been charged with fraud, is preparing to wind down if it can't find a way to fix a default by the end of the month.
The Vaughan, Ontario-based company breached a minimum earnings covenant on its C$22.5 million ($17.7 million) bankruptcy loan, and is currently in negotiations with potential investors and strategic partners over ways to address the default and its liquidity shortfall, according to a Thursday statement.
The company filed to restructure under the Companies' Creditors Arrangement Act, an approximate Canadian equivalent of Chapter 11 bankruptcy, in March 2020 after it ran into compliance issues with Health Canada over its cannabis production facilities.
CannTrust has until Jan. 31 to address the default. It's developing a wind-down plan to maximize its asset value if it can't reach a financing agreement or complete a strategic transaction, according to the statement.
Its former chief executive officer and former chairman of the board were charged last June in Ontario with fraud and other offenses related to breaches of cannabis growing rules in Canada.
CannTrust also said Thursday that four of its directors had resigned immediately, and that it had set up a trust to resolve class-action lawsuits and additional money to settle claims related to its Canadian restructuring.
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