Fire & Flower Gets Court Order for Creditor Protection

By Robb M. Stewart

Canadian cannabis retailer Fire & Flower Holdings and its subsidiaries have received a court order for creditor protection, offering it time to streamline operations in an effort to keep its operations running.

Fire & Flower said it received the order from the Ontario Superior Court of Justice after applying for protection under the Companies' Creditors Arrangement Act following a review of possible options. The company had been seeking additional financing to raise capital to fund its operations and late last month hired a financial advisor to help with the process.

The initial court order includes a stay on creditor proceedings, approval of a loan from shareholder Alimentation Couche-Tard and the appointment of FTI Consulting Canada as monitor of Fire & Flower.

The move comes at a turbulent time for Canada's cannabis industry, which is struggling after initially booming following legalization in late 2018 as the market became oversupplied from about mid-2019, weighing on prices. Producers have increasingly been scaling back operations in the country, cutting jobs and closing facilities.

Fire & Flower said it sought creditor protection in order to receive a stay of proceedings that will allow it to work with its monitor to work on a process to streamline and conduct a court-supervised sales process to find a going concern solution for its operations.

An affiliate of convenience-store operator Couche-Tard has agreed to advance a 9.8 million Canadian dollars ($7.3 million) debtor-in-possession loan to the company that is conditional on, among other things, the initial court order remaining in effect.

Fire & Flower said its board will remain in place and management will remain responsible for the day-to-day operations of the Company, under the oversight of the monitor.

The company, which has more than 90 corporate-owned stores and operates brands that include Friendly Stranger and Firebird Delivery, in May said it needed raise capital to fund its operations, meet growth targets and continue as a going concern. It recorded a widened loss in the first three months of the year after booking an impairment charge, though higher retail sales helped lift overall revenue 5.3% from a year earlier.

Fire & Flower said it expects the Toronto Stock Exchange will place the company under a delisting review. The shares, which last closed at C$0.29, have fallen 75% so far this year and are down more than 90% over the last 12 months.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

June 06, 2023 08:15 ET (12:15 GMT)

Copyright (c) 2023 Dow Jones & Company, Inc.