iAnthus’ Recapitalization Transaction Remains In Play, Courts Elect To Not Dismiss Petition Just Yet

Well, it seems that things for iAnthus Capital (CSE: IAN) shareholders aren’t quite as rosy as they appeared to be yesterday. Whereas yesterday, based on the limited information available following the fairness hearing it appeared that shareholders had finally won a bit of ground in their battle to grab more than 2.75% of the company, it seems that isn’t exactly the case.

As it turns out, Justice Gomery of the Supreme Court of British Columbia didn’t actually have an issue with the plan of arrangement proposed as a whole. Rather, the reasons for the decline on the plan of arrangement in particular was centered around a permanent injunction included within the plan, and the corresponding release. The injunction, as written, bars all persons as follows:

“All Persons are permanently and forever barred, estopped, stayed and enjoined, on and after the Effective Date, with respect to any and all Released Claims, from (a) commencing, conducting or continuing in any manner, directly or indirectly, any action, suits, demands or other proceedings of any nature or kind whatsoever against the Released Parties, as applicable; (b) enforcing, levying, attaching, collecting or otherwise recovering or enforcing by any manner or means, directly or indirectly, any judgment, award, decree or order against the Released Parties; (c) creating, perfecting, asserting or otherwise enforcing, directly or indirectly, any lien or encumbrance of any kind against the Released Parties or their property; or (d) taking any actions to interfere with the implementation or consummation of this Plan; provided, however, that the foregoing shall not apply to the enforcement of any obligations under this Plan.“

In connection with this text, the just has stated, “The injunction gives teeth to the release and, by reason of the carve-out for gross negligence, fraud, or wilful misconduct, there may be questions as to the applicability of the release.” Essentially, it appears that the Judge does not approve of how far-reaching the release is.

The result, is that Justice Gomery has not dismissed the petition. Instead, he has granted iAnthus, “to apply, if it thinks fit, on the basis of an amended plan of arrangement.” Specifically, he has stated on the matter, “if it were not for the release and injunction, I would approve it. It is possible that iAnthus and the noteholders may agree to amend the plan to narrow the release and injunction to the point of acceptability.”

In short: a final ruling has not been made on the matter.

In a news release filed late this afternoon, iAnthus did not indicate how specifically they will proceed at the current time, however it is assumed that they will look to amend the plan and obtain approval from their noteholders as Justice Gomery outlined.

Instead, the company indicated that it has obtained an approval from the parties to the recapitalization transaction to extend the deadline for pursuing the transaction under the Companies Creditors Arrangement Act to October 6, 2020. Previously, the deadline was set at September 28, 2020. This indicates that the company will like pursue amendments first and foremost, which would result in shareholders obtaining just 2.75% of the resulting company.

The full text of the judgement can be found via BC Courts here.

iAnthus Capital Holdings remains halted on the CSE.

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Information for this briefing was found via Sedar, BC Courts and iAnthus Capital Holdings Inc. 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.