Increasing pressure from the ongoing pandemic has led a Nevada cannabis breeder to file for Chapter 11 bankruptcy protection. The company blames shutdowns in Europe as the leading cause of its need for the filing.
Pharmagreen Biotech, based in Carson City, specializes in breeding small starter cannabis plants, known as clones, liners, plantlets, or just young plants and selling them to growers in both hemp and marijuana. Other services they provide include cold storage and extraction for plants.
“As we started to execute on our business plan, earlier this year before the spread of COVID-19, we completed financing that carried toxic terms after 6 months. Due to the Pandemic, our ETN process got delayed as Europe shut down for over two months, and these notes became due and as result, these lenders are seeking very toxic conversions that would essentially wipe out the company’s valuation. After taking much time to carefully analyze our strategic options, we have decided that a voluntary chapter 11 filing provides the best possible outcome for Pharmagreen,” said Peter Wojcik, CEO of Pharmagreen Biotech, in a press release. “We plan to engage all our lenders to settle debts in a way that is fair and beneficial for all parties going forward.”
After agreeing to steep terms on several loans early in the year before COVID-19 broke out, the company finds itself unable to pay back its debts. Chapter 11 rules will allow the company to continue operating and restructure while paying off its debts.
“We are working non-stop on expediting the in-court restructuring that will allow us to maintain our operational momentum and uphold the obligations we have to our shareholders,” Wojcik said. “We could not allow these toxic lenders to harm our company any further and the investments made by our loyal shareholders. We feel that we can secure necessary additional funding and, coupled with Pharmagreen Inc.’s ETN asset-backed bond scheduled to begin trading on the European markets in the near future, we can successfully exit this process with a more successful future.”