VAUGHAN, ON, Oct. 19, 2022 /PRNewswire/ - CannTrust Holdings Inc. (the "Company" or "CTH"), a minority investor in Phoena Holdings Inc. ("Phoena", formerly CannTrust Equity Inc.) today announced that it has made a Division I Proposal pursuant to the Bankruptcy and Insolvency Act (Canada) (the "Proposal").  Phoena's operations are not impacted by the restructuring of CTH.

Further to its press release dated July 7, 2022, CTH had intended to hold its annual general meeting on or before November 30, 2022. However, in order to hold such annual meeting, CTH would be required to, among other things, prepare audited financial statements. CTH has determined that it is not feasible to complete the audit and other work necessary to hold an annual general meeting before November 30, 2022. In these circumstances, CTH believes it is in the best interests of its stakeholders to make a proposal to its creditors under the BIA.

The Proposal is being funded by Phoena, with the support of Phoena's largest shareholder, Marshall Fields Holdings, a wholly-owned subsidiary of Kenzoll B.V., a Netherlands based private-equity company.  Phoena's operations are not impacted by the restructuring of CTH. The Proposal is also being supported by CTH's lenders.

Subject to satisfying certain conditions, including approval from creditors and obtaining an approval order for the Proposal from the Court, CTH intends to address its remaining liabilities, dispose of its residual assets, distribute its shares in Phoena and dissolve in advance of November 30, 2022 or as soon as practicable after that date. 

CTH intends to distribute the shares it holds in Phoena to its existing shareholders, provided that, (i) shareholders are required to hold at least 10,000 common shares of CTH in order to qualify for a distribution of Phoena common shares; and (ii) any distribution of Phoena shares to a holder of CTH shares who is a person that is not Canadian or a U.S. person will be subject to CTH obtaining an opinion from qualified and independent securities counsel that such distribution is exempt from any requirement to prepare, file or deliver a prospectus or similar document. The Company is limiting the distribution of its Phoena Holdings shares to holders or owners of at least 10,000 CTH common shares so that the costs of distribution will not significantly exceed the value of the Phoena shares being distributed. When Phoena completed its private placement with Marshall Fields Holdings and the other strategic investors in March, 2022, they were issued common shares at a price of approximate $0.009 per share, implying that 10,000 shares had a value of $90.

Only those creditors to CTH with proven claims (after submitting a proof of claim in accordance with the claims procedure) shall be entitled to attend the creditors meeting, vote on the resolution to approve the Proposal and participate in any distributions contemplated by the Proposal. To obtain further details about the claims procedure, the time and place of the creditors meeting and/or to get a proof of claims form and copy of the claims package, please visit the Proposal Trustee's website at The Proposal Trustee will post additional relevant information and documentation related to these proceedings on its website as they become available.     

The hearing date for court approval of the Proposal will be scheduled after the creditors meeting, if the Proposal is approved by the creditors at the creditors meeting. Details on the hearing date will be posted to the Proposal Trustee's website once available. Any person wishing to support or oppose the relief sought at the approval hearing may serve court materials on the service list setting out their basis for their support or opposition and/or attend the hearing. After considering the court materials filed by the Proposal Trustee, CTH and any other person, and hearing the submissions of those present at the hearing , the Court may approve the Proposal and other relief sought by CTH. If approved by the Court, CTH would then proceed to implement the Proposal.

Phoena continues to explore strategic options to generate liquidity for its shareholders.  The Board's deliberations are ongoing and progressing but there can be no assurance that Phoena will ultimately be successful.

It is a holding company and its primary asset is comprised of an approximate 10% equity interest in Phoena. Although CannTrust is a reporting issuer under the laws of each of the Canadian provinces except for Quebec, it remains subject to the CTO and its common shares have been delisted by the Toronto Stock Exchange and the New York Stock Exchange.

Phoena is an award-winning, federally regulated licensed cannabis producer, with locations in Vaughan and Fenwick, Ontario. Phoena operates a portfolio of brands, including estora, Liiv, SYNR.G and Xscape.

Phoena is committed to providing exceptional consumer experience, quality & consistent products. Phoena's greenhouse produces Grade A cannabis flower, which is sold in a variety of dried flower and extract formats.

Phoena creates cannabis products that meet the diverse needs of patients and consumers, promoting positivity, supporting creativity, and inspiring confidence.

Phoena, empowering you every day.

Learn more at Phoena.com

This press release contains "forward-looking information" within the meaning of Canadian securities laws and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable United States safe harbor laws, and such statements are based upon CannTrust's current internal expectations, estimates, projections, assumptions and beliefs and views of future events.

Forward-looking information and forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expect", "likely", "may", "will", "should", "intend", "anticipate", "potential", "proposed", "estimate" and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions "may", "would" or "will" happen, or by discussions of strategy.

The forward-looking information and statements in this news release include statements relating to CTH's efforts to implement a Proposal under the BIA and Phoena's exploration of strategic options to generate liquidity for its shareholders. Forward-looking information and statements necessarily involve known and unknown risks, including, without limitation: the risk that, if Phoena requires additional equity, the Company's investment in Phoena could be diluted further; the risk that Phoena or its affiliates could default under its credit facilities from Cortland Credit Lending Corporation or Marshall Fields International B.V., which are secured against substantially all of Phoena and the Company's assets; the risk that the Company will not be able to obtain a Proposal Approval Order from the Court or complete the contemplated restructuring; the impact of any regulatory and other investigations or proceedings; the risks associated with general economic conditions and/or adverse industry events; the risk of loss of markets; the risk of future legislative and regulatory developments in Canada, the United States and elsewhere; the state of the cannabis industry in Canada generally; the ability of Phoena to attract and retain suitable directors, officers and employees; the risks that Phoena will not be able to satisfy the requirements of a stock exchange to obtain a listing or complete a strategic transaction; and the ability of Phoena to successfully implement its business strategies.

Any forward-looking information and statements speak only as of the date on which they are made, and, except as required by law, neither the Company nor Phoena undertake any obligation to update or revise any forward-looking information or statements, whether as a result of new information, future events or otherwise. New factors emerge from time to time, and it is not possible for the Company or Phoena to predict all such factors. When considering these forward-looking information and statements, readers should keep in mind the risk factors and other cautionary statements in the Company's Annual Information Form dated March 28, 2019 (the "AIF") and filed with the applicable Canadian securities regulatory authorities on SEDAR at and filed as an exhibit the Company's Form 40-F annual report under the United States Securities Exchange Act of 1934, as amended, with the United States Securities and Exchange Commission on EDGAR at www.sec.gov (the "March 2019 Form 40-F"). The risk factors and other factors noted in the AIF could cause actual events or results to differ materially from those described in any forward-looking information or statements. Readers are also reminded that the Company remains in default of its periodic disclosure requirements under applicable securities laws and stock exchange requirements, that its most recent AIF, Form 40-F and other disclosures do not reflect all risk factors that currently face the Company, and that the Company has not completed or filed the restatements of the financial statements included in the AIF or the March 2019 Form 40-F or otherwise filed an amendment to such Form 40-F, and that the Company was permitted by the Initial Order of the Superior Court of Justice to not to correct its prior filings or make any further filings in respect of periodic disclosure requirements under applicable securities laws and stock exchange requirements. None of the Company's securities is listed for trading on any stock exchange in any jurisdiction and, in Canada, trading in the Company's securities is subject to a cease-trade order issued on April 13, 2020 by the Ontario Securities Commission for CannTrust's failure to comply with its disclosure obligations under applicable securities laws.

SOURCE CannTrust Holdings Inc.