Hexo Has Filed A $35 Million Counterclaim Against Medipharm Labs

It appears that Hexo Corp (TSX: HEXO) (NYSE: HEXO) has filed a counterclaim against Medipharm Labs (TSX: LABS) in relation to the outstanding lawsuit between the two licensed producers, wherein Medipharm Labs initiated proceedings over a breach of contract. The counterclaim in connection with the lawsuit has been pegged at $35 million as per regulatory filings.

The filing of a counterclaim in connection with the lawsuit was revealed this morning following the filing of Medipharm Labs’ first quarter financial results. Text within the filings under the firms ongoing contingencies states, “The Claim relates to, among other things, the payment of outstanding amounts due to MPL for products shipped to and received by the customer and deposits owed to MPL for future shipments. The outstanding amounts on the date of the claim was approximately $9,800. On February 26, 2020, the defendant in the Claim filed a statement of defence and counterclaim for $35,000.”

Medipharm's disclosure on the ongoing statement of claim against Hexo Corp.

This text lines up with regulatory filings made within Hexo’s own financial results, filed last week for the period ended April 30, 2020, wherein the company indicated that on February 26, 2020 they had filed a counterclaim and statement of defence in relation to a lawsuit.

The original lawsuit is in connection with a $35 million supply agreement signed between Medipharm Labs and Newstrike Brands in February 2019, prior to the producer being acquired by Hexo later in the year. Hexo claims that this supply agreement “had serious concerns” and was “entered into in bad faith,” and as such refuses to honor the contractual agreement. Hexo allegedly hasn’t made any payments in connection with the agreement since October.

Text of the counterclaim has not been reviewed by The Deep Dive. Medipharm Labs has since served a reply and defence to the counterclaim, as well as a motion for summary judgment which was served on March 27, 2020. Hexo Corp last traded at $0.79 on the NYSE.


Information for this briefing was found via Sedar, Medipharm Labs and Hexo Corp. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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