GenCanna Global creditors committee says bid procedures contain flaws

By Caroline Salls

Pittsburgh, March 2 – GenCanna Global USA, Inc.’s official committee of unsecured creditors objected to the company’s motion for approval of the bid procedures for the proposed sale of its assets, according to a Monday filing with the U.S. Bankruptcy Court for the Eastern District of Kentucky.

While the bidding procedures motion claims to provide a pathway for the company to consider both reorganization and a sale of its assets, the committee said in reality “it requests approval to conduct a lightning-fast process that almost assuredly will result in a fire-sale type transaction that would benefit only MGG Investment Group LP, the debtors’ secured lender that is driving this case.”

As a result, the committee said the motion should not be approved until several flaws are corrected.

The creditor group said the proposed timeline for GenCanna’s sales process – just over six weeks from the hearing on the bidding procedures to the bid deadline – “is wholly unreasonable and designed to distribute value to MGG to the detriment of all other constituents.”

In addition, the committee said that while the company says it is pursuing a restructuring as well as a sale, that option would be virtually impossible to complete on the proposed timeline.

The committee also said the court “should not grant the debtors carte blanche authority to enter into an as-yet-undisclosed stalking horse agreement for the sale of their assets.”

To date, the committee said GenCanna has not (a) identified a proposed stalking horse bidder or otherwise established clear parameters for a stalking horse bid.

The creditor group also said the court should not approve payment of a break-up fee to MGG or any other lender for submitting a credit bid.

Winchester, Ky.-based GenCanna is a vertically integrated agriculture-technology company specializing in the production of hemp rich in CBD. The company filed bankruptcy on Feb. 6 under Chapter 11 case number 20-50133.

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