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Mar 1, 2020

McMillan LLP acted for MMCAP International Inc. SPC (“MMCAP”), the holder of 50% of $10 million of secured debentures (the “Debentures”) issued by Pure Global Cannabis Inc. (“Pure Global”).

Together with its subsidiaries, Pure Global was engaged in the production, extraction and sale of dried cannabis products at its facilities in Brampton, Ontario. Pure Global and its affiliates filed for protection under the Companies’ Creditors Arrangement Act on March 18, 2020.  Holders of the Debentures opposed the filing on the basis that the value of the collateral or the business as a going concern was insufficient to cover Pure Global’s secured obligations.

At the comeback hearing, MMCAP argued for the appointment of a receiver over the non-cannabis assets and operations of Pure Global and its affiliates.  The debtors and Monitor opposed the appointment of a receiver on the basis that under applicable provincial and federal cannabis legislation, a receiver was not authorized to control a cannabis company.

The court agreed that the appointment of a receiver was appropriate.  It granted an innovative order appointing A. Farber & Partners Inc. as receiver over all of the assets and undertakings of Pure Global and its affiliates with a carve out for cannabis-related assets and operations.  The receivership is believed to be the first in respect of a company with active cannabis operations.

The McMillan team was led by Jeffrey Levine and included Adam Maerov and Jason Chertin.

McMillan’s Restructuring & Insolvency Group is one of Canada’s leading business insolvency groups. Our highly skilled team includes top-ranked lawyers known for their expertise and creative problem-solving, allowing McMillan to deliver the highest standards of transactional and structuring leadership, and commercial advocacy. We have advised on the restructuring, purchase and sale of businesses in a variety of industries. We regularly work with financially challenged companies, boards of directors, Canadian and US financial institutions, lending syndicates, bondholders, investors, ad hoc and official creditors’ committees, court-appointed officers and major customers and suppliers of insolvent companies. We provide our clients with successful outcomes and comprehensive solutions to the most challenging problems.