The remaining California assets have also been placed in receivership.
It will probably come as no surprise to many that MedMen filed for bankruptcy in Canada on April 24. The troubled and once high-flying self-proclaimed unicorn of the cannabis industry is telling the courts that it has C$561 million ($410.4 million) in liabilities. The company also issued a press release after markets closed on Friday.
MedMen said that B. Riley Farber Inc. was appointed bankruptcy trustee. The first meeting of bankruptcy creditors will be held via a ZOOM video conference on May 14.
“The difficult decision to shut down operations and commence the Bankruptcy Proceedings and Receivership Proceedings was made after careful consideration of the current financial condition of the Company and its subsidiaries, their inability to pay their liabilities as they become due and the anticipated enforcement actions of secured creditors. After careful consideration of these factors and in the absence of other available alternatives, the board of directors of the Company determined that it was in the best interests of the Company to proceed with the commencement of the Bankruptcy Proceedings and Receivership Proceedings,” the company said in its statement.
The company said its shares are expected to be delisted even though they haven’t traded for several weeks.
Flaming out
MedMen started 2024 in a downward spiral. In January, the company was downgraded by the OTC Marketplace and the shares had zero value. This was after a fire sale of assets. Green Market Report wrote that MedMen managed to sell its Arizona assets to Mint and said it would get $14 million. MedMen also said that it has sold some of its Nevada assets but that deal hadn’t received regulatory approval yet. The company announced in December that it was selling MMOF Vegas Retail, Inc. and MMOF Vegas Retail 2, Inc. to a company called Retail Facilities Operations NV, LLC. managed by Eivan Shahara. Shahara is the Co-Founder and CEO of Brightroot, which is the parent company of Mint Cannabis.
Then the C-suite and board began jumping from MedMen‘s sinking ship as Ellen Deutsch Harrison, who was named CEO last July, stepped down effective Jan. 19. Then Executive Chairman Michael Serruya also departed, effective Jan. 24. That was when the restructuring efforts really took hold.
MedMen began closing many of its California stores and offering deep discounts on remaining inventory. However, many major brands had quit working with the company over nonpayment issues. The website hasn’t been available since the store closures began.
Also on April 23, 2024, the company’s wholly-owned subsidiary, MM CAN USA, Inc., a California corporation, was placed into receivership in the Los Angeles Superior Court, Santa Monica Division to ‘effectuate an orderly dissolution and liquidation of its California based assets.’
The statement also said that Medmen’s current Chief Restructuring Officer formally resigned and is now appointed by LASC as the Receiver of MM CAN USA, Inc. The operations and assets of MedMen’s subsidiaries will be dissolved or liquidated according to applicable laws in the United States.
Empty-handed
Some of the biggest creditors in the “A” list included:
- Superhero Acquisition Corp. $359 million
- Treehouse Real Estate Investment Trust $100 million
- Hankey Capital $82 million
- Verano Holdings $1.2 million
- Former CFO Amit Pandey $220k
The “D” list of creditors listed 10 lawsuits with parties like:
- Adam Bierman
- Ascend Wellness
- Hawke Media
- Thor 942 Fulton St.
MedMen continued to take more money from investors even as its mountain of debt was beyond salvaging. For example, on Aug. 13, 2021, Tilray Inc. (NASDAQ: TLRY) acquired $165.8 million of senior secured convertible notes and related warrants issued by MedMen via the company’s ownership interest in a limited partnership.
Green Market Report previously reported that according to Bloomberg and 13F filings with the SEC, several hedge funds also have a stake in the collapsing company.
- Parallax Volatility Advisors owns 31 million shares of MedMen or 6.25% of the outstanding shares.
- Indulge Holdings LLC, which is associated with Michael Serruya, a former director of the company, looked to have 19 million shares.
- MM Asset Management has 697,000 shares.
In addition to the investors, numerous landlords got burned on rent payments, and multiple vendors weren’t paid for inventory.
MedMen entered the industry with a braggadocio and bluster that rubbed many the wrong way. Despite numerous accusations of bad behavior in statements and deeds, the company won many of those court battles but lost in the public opinion court.