Cannabis company Choom obtains creditor protection, interim financing from Aurora

VANCOUVER — Choom Holdings Inc. and some of its subsidiaries have obtained creditor protection from the Supreme Court of British Columbia and interim financing from Aurora Cannabis Inc.

In court filings, the Vancouver-based cannabis retailer says it sought protection under the Companies’ Creditors Arrangement Act because emergency measures implemented by governments to quell COVID-19 have negatively affected operations, sales, demand and its supply chain.

The company says it has experienced decreased sales over the past 10 months, but also struggled because the number of licensed cannabis stores have increased and there has been an explosion of competitively priced pot shops in Alberta.

Choom says it has consolidated liabilities of more than $22.4 million and a working capital deficit of at least $4.1 million.

Edmonton pot company Aurora, which is a “significant” shareholder of Choom, will advance an interim financing loan of $800,000 to Choom, which will accrue interest at a rate of 12 per cent annually and mature, at the latest, on Aug. 31.

Choom intends to use the cash and protection to start a restructuring that reduces overhead and closes some stores.

Choom, which operates through a series of provincial corporations and owns subsidiary Phivida Holdings Inc., runs dozens of stores in Alberta, B.C. and Ontario.