Fire & Flower Begins Formal Restructuring

Canadian cannabis retailer part-owned by Alimentation Couche-Tard receives protection under CCAA
Fire & Flower cannabis store
Photograph courtesy of Fire & Flower

Fire & Flower Holdings Corp.—a cannabis retailer that is part-owned by convenience-store operator Alimentation Couche-Tard—and its Canadian subsidiaries filed for and received protection from their creditors under the Companies’ Creditors Arrangement Act (CCAA) in Canada.

The company had been pursuing additional financing to raise capital to fund its operations and meet its growth targets. On May 26, it engaged a financial advisor to assist with reviewing strategic options.

“After careful consideration of all available alternatives and consultation with legal and financial advisors, the directors of the company determined that it was is in the best interests of the company to file an application for creditor protection under the CCAA,” Fire & Flower said.  

In response to a request for comment, CSP Daily News received an automatic email reply from the Fire & Flower Investors Relations team, directing it to the release on its website.

The decision for formal restructuring was a difficult one, Fire & Flower said, and was made after considering “many other alternatives.”

Fire & Flower received an order for creditor protection from the Ontario Superior Court of Justice under the CCAA which, among other things, includes a stay of proceedings in favor of the Fire & Flower Group, approval of a debtor-in-possession loan of $9.8 million Canadian ($7.31 million U.S.) and the appointment of FTI Consulting Canada Inc. as a monitor of the Fire & Flower Group.

The CCAA is a federal law allowing insolvent corporations that owe creditors more than $5 million Canadian ($3.73 million U.S.) to restructure their business and financial affairs. The act allows companies to continue business while they seek to develop and obtain arrangements with creditors. Canadian courts have said the main purpose of the CCAA is to avoid the social and economic consequences of bankruptcy, according to Canada’s Office of the Superintendent of Bankruptcy. The statute offers more flexibility and greater jurisdiction to deal with issues that may arise during the restructuring process than the more rule-based Bankruptcy and Insolvency Act, the office said. 

Fire & Flower is an adult-use cannabis retailer with more than 90 corporate-owned stores in its network, according to the company. Its subsidiaries include Friendly Stranger Holdings Corp., Pineapple Express Delivery Inc. and Hifyre Inc.

In the company’s first-quarter 2023 results, posted on May 15, it reported adjusted EBITDA of negative $1.8 million Canadian ($1.34 million U.S.) for the quarter, an improvement from the negative $3.8 million Canadian ($2.83 million U.S.) in fourth-quarter 2022. Retail revenue was up 9.1% for first-quarter 2023, despite having nine fewer stores from the first quarter in the year prior, the company said.

The company also said it was evaluating financing opportunities required to drive consolidation and bring the business to positive free cash flow in the earnings report.  

In 2019, Couche-Tard made a strategic investment in Fire & Flower Holdings, investing about $26 million for a 9.9% ownership interest. Through Laval, Quebec-based Couche-Tard’s investment, Fire & Flower said at the time, it was setting its sights on the global expansion as new cannabis markets emerge.

Laval, Quebec-based Couche-Tard’s 24-country global c-store network includes more than 7,100 in the United States, primarily under the Circle K and Holiday Stationstores banners. Couche-Tard’s total worldwide network consists of approximately 14,300 mostly Circle K-branded c-stores.

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