California-based Gold Flora Corp. (Cboe Canada: GRAM) (OTCQB: GRAM) filed a voluntary receivership request with Los Angeles Superior Court to protect itself from various lawsuits related to its acquisition of The Parent Co. in 2023 and debts related to ongoing operations as it prepares to go up for sale.
Gold Flora noted in a press release that it’s in default on a 2024 loan from J.J. Astor & Co. in the amount of $11.5 million.
The company said it expects experienced cannabis receiver Richard Ormond of Stone Capital Blossom to be named by the court to run the business. Ormond has also been winding down and selling off MedMen Enterprises assets after that multistate operator went belly up in early 2024.
“While preparing for an orderly sale of its California operations, Gold Flora intends to continue operating as a going concern and expects to be sold as such as it retains a business consisting of 16 dispensaries and a 100,000 square foot cultivation campus,” the company stated in the release.
CEO and founder Laurie Holcomb said that the receivership request – and the upcoming sale of the company’s assets – was “a difficult but correct decision to make for all stakeholders.”
“While Gold Flora remains a leading operator and retailer in the cannabis market in California with over $100 million in annual revenues, the liabilities on our balance sheet, many of which are due to lawsuits we inherited with the TPCO business combination, forced us to file for a voluntary receivership that is necessary to achieve an orderly sale of the business,” Holcomb said.
“We believe Gold Flora’s business remains valuable and sound, but receivership is our only option to sell the business as a going concern as opposed to seeing it broken up by different creditors, which we believe is not in the best interest of any stakeholder,” she said. “The board of directors of the company determined that it was in the best interests of the company and its stakeholders to proceed with the commencement of the receivership proceedings.”
Warning signals flashed throughout 2024 for Gold Flora. In November, one of the company’s creditors requested a receivership, citing a long-overdue debt of $236,000. Separately, a “limited receiver” was appointed in October by a Delaware court to handle $1.6 million of Gold Flora’s debts.
Gold Flora has not yet released its fourth-quarter financials for 2024, but at the end of the third quarter, the company posted a $56.5 million loss for the year and was carrying $273 million in total liabilities against $96.4 million in revenue.
Gold Flora is only the latest California cannabis company to go up for sale. Others, such as MedMen, flamed out in spectacular fashion over the past few years, including High Times, Herbl, StateHouse Holdings and others.