2368523 Ontario Limited (dba Curative Cannabis)

2368523 Ontario Limited (dba Curative Cannabis) (the “Debtor” or “Curative Cannabis”) is an early stage cannabis cultivation company that is in the pre-licensing and construction phase of its operations. Curative Cannabis does not have active operations and is in the process of building a facility in Chatham, Ontario for the purpose of cultivating cannabis.

On September 19, 2019, pursuant to an Order of the Court (the “Appointment Order”), B. Riley Farber Inc. (“B. Riley Farber”) was appointed receiver (“Receiver”) of the property, assets and undertakings of Curative Cannabis, pursuant to section 243 (1) of the Bankruptcy & Insolvency Act, R.S.C. 1985, c. B-3, as amended (the “BIA”), section 67(1) of the Personal Property Security Act, R.S.O. 1990 c.P-10 (the “PPSA”) and section 101 of the Courts of Justices Act, R.S.O. 1990, c C43, as amended (the “CJA”).

Status Update

On November 27, 2019 at Auxly Cannabis Group Inc. (“Auxly”) sought and obtained court-approval to foreclose on and discharge any subordinate security interest and terminate the Debtor’s interest in the Share Collateral, amongst other matters. A copy go the November 27, 2019 Court Order is posted below.

Background on the motions heard on November 27, 2019 is set out below.

Auxly Motion

On October 10, 2019, Auxly, the Debtor, Mr. Shpilt and Mr. Fitzgerald entered into a forbearance agreement (the “Forbearance Agreement”) under which, among other things, Auxly agreed on certain conditions to forbear from exercising its rights and remedies under the Amended and Restated Promissory Note, the PPSA, and other applicable law from October 10, 2019 until the earlier of (i) the occurrence of an Intervening Event (as defined in the Forbearance Agreement); or (ii) November 15, 2019 (the “Forbearance Period”). Pursuant to the Forbearance Agreement, the principal amount of the Amended and Restated Promissory Note was increased to $21 million to allow for completion of the approved construction contract for the Chatam facility.

In addition, the Debtor, Mr. Shpilt and Mr. Fitzgerald irrevocably and unconditionally consented to withdrawing their objections to the Notices of Foreclosure and irrevocably and unconditionally consented to such objections being rules ineffective following the expiry of the Forbearance Period.

The Forbearance Agreement was intended to provide more time for the Debtor to negotiate term sheets presented with the goal of refinancing the Debtor and paying out the Curative Indebtness.

There was a further adjournment from November 18, 2019 to November 27, 2019 to provide the Debtor additional time to negotiate refinancing, but to date that has not occurred.

As a result of the Forbearance Period and terms under the Forbearance Agreement, effective November 21, 2019, the Debtor is indebted to Auxly for $21.250 million.

The debtor has defaulted on the terms of the Forbearance Agreement. The Debtor had already consented to the foreclosure by Auxly in the event that it failed to comply with the terms of the Forbearance Agreement.

The Debtor was ultimately unable to secured refinancing to payout Auxly and as a result Auxly proceeded with the foreclosure.

Receiver Motion

On November 27, 2019, the Receiver sought and obtained court-approval of the First Report and the activities and conduct of the Receiver and its legal counsel to date.

Links to relevant documents, including Court related documents, can be found below.

On July 5, 2021, the Honourable Justice Pattillo of the Ontario Superior Court of Justice (Commercial List) issued an order approving, among other things, the following:

the time for service of the Notice of Motion and the Motion is hereby abridged and validated so that this motion is properly returnable today and hereby dispenses with further service thereof;
the Second Report of the Receiver dated June 30, 2021 (the “Second Report“) and the activities and coduct of the Receiver and its counsel, Miller Thomson LLP (“Receiver’s Counsel“);
the fees and disbursments of the Receiver and the Receiver’s Counsel, as set out in the Second Report and the Fee Affidavits, and such further fees and disbursements as may be necessary to complete the administration of the receivership;
effective upon the filing of a certificate by the Receiver certifying that all outstanding matters to be attended to in connection with the receivership of the Debtor has been completed to the satisfaction of the Receiver (the “Receiver’s Discharge Certificate“), B. Riley Farber shall be discharged as the Receiver, and B. Riley Farber and Receiver’s Counsel shall be released from any and all liability that they have by reason of; or in any way arising out of, any acts or omissions while B. Riley Farber was acting in its capacity as the Receiver;
effective upon the filing of the Receiver’s Discharge Certificate, Confidential Appendix 1 to the First Report of the Receiver dated November 22, 2019 shall no longer be sealed and shall form part of the public record.

Links to relevant documents can be found below.

Creditor Enquiries

For creditor enquiries, please contact:

Geanina Schmidt
T: 416.496.3753
E: gschmidt@brileyfin.com

The purpose of this website is to provide documents to any interested persons regarding this proceeding. The documents listed below are in pdf format and can be viewed and/or downloaded. Please feel free to return to this website periodically for future updates on the status of these proceedings. Additional documents and information will be posted as it becomes available.

Documents

Motion Materials

Court Orders & Endorsements

Receiver’s Reports

Second Report of the Court-Appointed Receiver (without appendices) – June 30, 2021