CannTrust Holdings Inc CNTTQ

Canntrust restructuring agrmnt +class action plaintiffs.....

[Humanist]

CannTrust Announces Restructuring Support Agreement with Key Class Action Plaintiffs and their Counsel

January 20, 2021 - 3:30 PM EST

 

Parties agreed to settle litigation by way of CCAA Plan of Arrangement

VAUGHAN, ON , Jan. 20, 2021 /PRNewswire/ - CannTrust Holdings Inc. ("CannTrust" or the "Company") (unlisted) announced today that it has entered into a Restructuring Support Agreement ("RSA") with plaintiffs who have commenced litigation in Canada and the United States (the "Securities Claims") asserting claims against CannTrust and others on behalf of a global class of CannTrust shareholders (together, the "Securities Claimants") and their legal counsel. The RSA provides a comprehensive framework for settling the Securities Claims under a Court-approved plan of compromise, arrangement and reorganization ("Plan of Arrangement") pursuant to the Companies' Creditors Arrangement Act ( Canada ) ("CCAA").

"Today's announcement represents a significant milestone towards the resolution of substantially all of the civil litigation claims that were filed against CannTrust following the Company's non-compliance with certain Health Canada regulations," said Greg Guyatt , Chief Executive Officer at CannTrust. "Although much work remains to conclude the matters contemplated by the RSA, I am pleased that, in addition to relaunching our medical and recreational businesses, we are also making further tangible progress to exit from the CCAA and put CannTrust in a position to be a successful player in the cannabis industry."

The RSA contemplates that the Securities Claims will be settled as part of a broader restructuring of the Company and its subsidiaries pursuant to a Plan of Arrangement that will be completed under the CCAA.

Implementation of the Plan of Arrangement will be subject to several conditions, including negotiation of mutually satisfactory definitive documentation and approval of the Plan of Arrangement by the Ontario Superior Court of Justice (Commercial List) (the " Ontario Court") in the CCAA proceedings. The RSA requires the parties to negotiate in good faith to finalize the terms of definitive agreements and the Plan of Arrangement on terms consistent with the terms of the RSA and to cooperate in good faith during the mediation ordered by the Ontario Court on May 8, 2020 (the "Mediation"). In addition, the RSA requires the other parties to cooperate with CannTrust to pursue and support the settlement of the Securities Claims in the manner contemplated by the RSA.

The RSA also contemplates the resolution, pursuant to the Plan of Arrangement, of all claims against CannTrust and certain other defendants in the Securities Claims, including Greg Guyatt , Mark Dawber , John Kaden , Robert Marcovitch , Shawna Page , Mitchell Sanders and Cajun Capital Corporation. Upon the implementation of the Plan of Arrangement, CannTrust will, among other things, pay CAD $50 million into a trust that will be established for the benefit of the Securities Claimants. The RSA permits other defendants to elect to join in the settlement of the Securities Claims pursuant to the Plan of Arrangement, subject to certain conditions.

The Company stated that its cash position at January 19, 2021 was approximately CAD $78 million .

CannTrust also expressed its appreciation for the tireless efforts and wise counsel provided to all parties to the RSA by retired Associate Chief Justice of Ontario , Dennis O'Connor , OC, OOnt, who has supervised the Mediation.

CannTrust remains under CCAA protection to facilitate its efforts to resolve its civil litigation claims and complete its review of strategic alternatives, which includes a review of financing options. Aspects of the ongoing efforts remain confidential, and the Company is unable to predict with any certainty either their timing or outcome.

In the meantime, the reinstatement of its cannabis licenses and the restoration of its ongoing operations, CannTrust's re-entry into the Canadian recreational and medical cannabis business segments and its entry into the RSA are essential to the Company's focus on rebuilding its franchise. For more information about CannTrust's CCAA proceedings, please visit: www.ey.com/ca/canntrust .