In a recent legal development that underscores the intricate interplay between federal bankruptcy law and the cannabis industry, a court case has emerged involving a bankruptcy filing by an employee of a cannabis company. It’s well established that, because cannabis is generally considered a controlled substance under the federal Controlled Substances Act (CSA), certain cannabis related companies are precluded from obtaining debt relief through bankruptcy. Now individuals employed by cannabis companies might find themselves in the same boat. In Blumsack v. Harrington, 2024 Bankr.

It is being reported that the Latvian State Security Service (the VDD) has discontinued a criminal investigation started in November 2023 into the sale of a helicopter by a company indirectly co-owned by the designated person Petr Aven .

More than 75% of the U.S. population lives in states that have legalized cannabis for adult and/or medical use.

Pursuant to a 2022 directive from President Joe Biden, a 2023 recommendation of the U.S. Department of Health and Human Services, and a scientific review released in January supporting the HHS's recommendation, the U.S. Drug Enforcement Administration is now evaluating whether to reclassify cannabis as a Schedule III drug.

On 30 November the Supreme Court delivered its written judgment dealing with the correct test for insolvency when considering the eligibility of a debtor for a Personal Insolvency Arrangement (PIA) under the Personal Insolvency Act 2012 (as amended).

Background

One of the qualifying criteria for a PIA is that the debtor must demonstrate that the debtor is “insolvent” within the meaning of section 2(1) of the Personal Insolvency Act 2012. That provision defines the term as meaning “that the debtor is unable to pay his or her debts in full as they fall due”.

In contrast with a majority of bankruptcy courts that routinely dismiss cannabis-related cases for perceived violations of the Controlled Substances Act (CSA), the U.S. Bankruptcy Court for the Central District of California in the recent opinionIn re Hacienda, No. 2:22-BK-15163-NB, (Bankr. C.D. Cal. July 11, 2023), refused to conform to the same historical standard. Instead, the Bankruptcy Court struck down the U.S. trustee’s motion to dismiss not once but twice in favor of confirming a marijuana business’ Chapter 11 plan of reorganization.

Background

On September 20, 2023, the U.S. Bankruptcy Court for the Central District of California (“Court”) confirmed a plan for a cannabis-related business (“Debtor”) to sell its equity interests in a Canadian cannabis company, Lowell Farms, and distribute the proceeds to its creditors.

While the economy continues to look positive on paper, the underlying issues stemming from recent inflation and ever increasing overheads continue to affect businesses. Against this backdrop and a year on from the commencement of the European Union (Preventive Restructuring) Regulations 2022 (SI 380/2022) (“the 2022 Regulations”) on 29 July 2022, it seems auspicious to remind directors of their duties to wind up a company in a timely manner or simply exercise good corporate governance and wind up companies that are no longer operational.

The High Court has delivered its written judgment on a recent decision that was the first of its kind by appointing an examiner to a company registered outside of the State, as it was established that its centre of main interests was in the Republic of Ireland.

As the cannabis industry matures, there will be winners and losers. Losers lack access to the U.S. Bankruptcy Code. Marijuana related assets cannot be sold free and clear of liens and encumbrances via the tried and true bankruptcy section 363 sale, which leaves the loser’s creditors without the best tool to maximize the value of the loser’s assets, and deprives acquirers of a federal court order conveying assets. What’s the state of play, and what’s the alternative for the losers, their creditors, and the companies that would acquire them?

STATE OF PLAY

In the recent case of Re Avanti Communications Limited (in administration) (Re Avanti), the court considered the nature of fixed and floating charges. Whether a charge is fixed or floating has implications for both lenders and administrators in terms of determining to what extent a chargor can recover from the charged assets and to what extent a borrower can deal with its assets.

Background of case: