DionyMed Brands Inc. (CSE: DYME; OTCQB: DYMEF) is headed to bankruptcy. The cannabis company had been unable to meet the demands of its creditors and announced today it was unable to attract a viable transaction to restructure its debts. The company also said tried to seek a sale of its assets outside of a court process.
GLAS America (the company’s creditor) has therefore advised the company that it intends to proceed with the Receivership Application and DionyMed said it does not intend to oppose the appointment of a receiver. The company anticipates that FTI Consulting Canada Inc. will be appointed as a receiver at the hearing of the Receivership Petition or shortly thereafter.
DionyMed’s four directors Susan Watt, David Kerr, Brett Moyer and Stephen Dineley have advised the company that they intend to resign effective upon the appointment of the receiver.
It was previously announced that GLAS USA LLC and GLAS America LLC, under the company’s credit agreement dated January 16, 2019 provided the Company with notice of default under the Credit Agreement and demand for immediate payment of the amount of $24 million-plus any additional interest, fees and expenses and that GLAS America served the Company with a petition to the Supreme Court of British Columbia seeking the appointment of a receiver over all of the Company’s property and assets.
On September 23, Flow Capital began legal proceedings against Dionymed saying they were in default under the company’s royalty agreement. The claim is for the minimum sum of $2,698,116 which is made up of the investment balance, past due royalty payments and late payment fees. The company’s investment in DionyMed is $1,000,000 and there can be no assurance that the Company will recover any portion of its investment.
Just last month, Dionymed announced an additional investment from its senior secured investor of $3.2MM and a reorganization of the business to right-size the company. “This increases the credit facility with the senior lender to US$19.2 MM. The credit facility bears interest at LIBOR (at a floor of 2.5%) plus 12% plus an anniversary fee of 2.5%, maturing February 6, 2021. While the credit facility is currently in default, the senior lender has agreed to make additional advances to the Company.”
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