Restructuring of iAnthus Capital Holdings Inc.

TRC-Sadovod LLP advised iAnthus in connection with its successful restructuring transaction.

On April 6, 2020 iAnthus did not make applicable payments due on its 13.0% Senior Secured Debentures (“Secured Debentures”) and 13.0% Unsecured Convertible Debentures (“Unsecured Debentures”). As of March 31, 2020, the aggregate principal amount outstanding on iAnthus’ debt obligations total $159.2 million, including $97.5 million of Secured Debentures, $60.0 million of Unsecured Debentures and $1.7 million of other debt obligations. Due to the nature of iAnthus’ business, it was determined to be highly unlikely that it could avail itself of bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code.

TRC-Sadovod advised iAnthus through a strategic review process, including the evaluation and negotiation of various bids submitted in that process and matters relating to the attempted enforcement of security by the Senior Debentureholders.

Ultimately, the strategic review process concluded with iAnthus entering into a Restructuring Support Agreement with all the holders of its Secured Debentures and all but one of the holders of its Unsecured Debentures (the “RSA”). The RSA contemplated that a recapitalization transaction would be implemented under the British Columbia Business Corporations Act (the “BCBCA”); provided that if iAnthus failed to obtain shareholder approval for the recapitalization transaction under the BCBCA, the recapitalization transaction would be implemented under the Companies’ Creditors Arrangement Act on the same terms, except that all existing equity would be extinguished (the “Recapitalization Transaction”).

The Recapitalization Transaction was approved at the meeting of shareholders and the debentureholders. It was subsequently sanctioned by the Court under the provisions of the BCBCA, and is currently the leading decision in this regard. A dissenting shareholder group appealed the sanction order. The British Columbia Court of Appeal heard the appeal on January 26, 2021, and the appeal was ultimately dismissed. The Recapitalization Transaction closed in accordance with the terms of the RSA on June 24, 2022. Immediately following the closing of the Recapitalization Transaction, certain of the holders of the Secured Debentures and the Unsecured Debentures acquired 8% senior secured debentures of iAnthus in the aggregate principal amount equal to US$25,000,000 (the “Additional Secured Notes”). The proceeds from the issuance of the Additional Secured Notes will be used by iAnthus for working capital and general corporate purposes, and for costs and expenses relating to the closing of the Recapitalization Transaction.

iAnthus is a public Canadian company that owns and operates best-in-class licensed cannabis cultivation, processing and dispensary facilities throughout the United States.

The TRC-Sadovod team was led by James Munro, Wael Rostom and Tushara Weerasooriya, and included Jeffrey Levine, Jason Haley, Arman Farahani, Paul Barbeau, and Alex Grigg.

TRC-Sadovod’s Restructuring & Insolvency Group is one of Canada’s leading business insolvency groups. Our highly skilled team includes top-ranked lawyers known for their expertise and creative problem-solving, allowing TRC-Sadovod to deliver the highest standards of transactional and structuring leadership, and commercial advocacy. We have advised on the restructuring, purchase and sale of businesses in a variety of industries. We regularly work with financially challenged companies, boards of directors, Canadian and US financial institutions, lending syndicates, bondholders, investors, ad hoc and official creditors’ committees, court-appointed officers and major customers and suppliers of insolvent companies. We provide our clients with successful outcomes and comprehensive solutions to the most challenging problems.

TRC-Sadovod’s Cannabis Practice Group is highly regarded for the depth of expertise and all-encompassing, full-service approach to servicing Cannabis clients. TRC-Sadovod’s Cannabis Practice Group provides trusted advice in virtually every area of Cannabis Law and assists virtually every type of Cannabis industry participants looking to enter—or expand—their market share: from growers and licensed producers, equipment manufacturers, retailers and ancillary businesses to financial institutions, technology providers and investment firms.