- Canopy Growth Corp. has filed for bankruptcy for its sports drink brand, BioSteel, in both Canada and the U.S. The move is aimed at strengthening the cannabis company’s financial position, and it comes as Canopy Growth has ceased funding BioSteel.
- Canopy Growth’s stock rose by 17% following the announcement of the BioSteel bankruptcy filing. The company’s stock had experienced losses in recent sessions but had surged by about 239% in the past month due to the U.S. Department of Health and Human Services’ recommendation to reclassify cannabis.
- While BioSteel has demonstrated year-over-year revenue growth, Canopy Growth’s CEO, David Klein, stated that it does not align with the company’s cannabis-focused, asset-light strategy. As the senior secured lender, Canopy Growth plans to recover proceeds from the bankruptcy sale of BioSteel.
Canopy Growth Corp. has filed for bankruptcy for its sports drink brand, BioSteel, in both Canada and the United States.
This strategic move is aimed at bolstering the financial position of the cannabis company, which has recently halted funding for BioSteel.
The announcement had a substantial impact on Canopy Growth’s stock, which saw a 17% increase in value on Thursday.
This positive trend followed losses in recent trading sessions and can be attributed in part to a 239% surge in the stock’s value over the past month, spurred by the U.S. Department of Health and Human Services’ recommendation to reclassify cannabis.
The bankruptcy filing for BioSteel is positioned as a strategic move to immediately reduce cash burn and facilitate an organized sales process, according to the company.
Canopy Growth, serving as BioSteel’s senior secured lender, intends to recover proceeds from the bankruptcy sale.
The bankruptcy proceedings for BioSteel have been initiated under the Companies Creditors Arrangement Act (CCAA) in the Ontario Superior Court of Justice, and the company also plans to seek protection from creditors under Chapter 15 of the U.S. Bankruptcy Code, given the involvement of multiple countries.
Canopy Growth’s Chief Executive, David Klein, has emphasized that the BioSteel bankruptcy filing represents a significant milestone in the company’s plan to achieve adjusted earnings before interest, taxes, depreciation, and amortization by the end of fiscal 2024.