Fire & Flower announced that the company and its subsidiaries, including Friendly Stranger, Pineapple Express Delivery, and Hifyre, have filed for creditor protection in Ontario.
The company had been actively pursuing additional financing to raise capital to fund its operations. According to court filings, Fire & Flower Holdings Corp. had just $8.1 million in cash on hand as of March 31, against $50.8 million in “current liabilities,” and is looking to sell its remaining assets.
On May 26, 2023, the company engaged a financial advisor to assist with reviewing strategic options, including financing options. It was determined that it was in the best interests of Fire & Flower to file an application for creditor protection.
In a factum submitted to the court, Fire & Flower said its significant net losses stemmed from cannabis retail operations, including increased competition and operating costs and margin pressure.
Under creditor protection, Fire & Flower will work with FTI Consulting Canada to streamline its operations and conduct a court-supervised sales process to obtain a going concern solution for its operations and maximize the value of the company’s assets for the benefit of its stakeholders.
A $9.8 million DIP Loan will fund Fire & Flower’s operations. The DIP lender is an affiliate of Alimentation Couche-Tard, a Canadian operator of convenience stores that owns a stake in the cannabis retailer.
Fire & Flower is reportedly seeking to lay off an unspecified number of employees and get out of leases for several of its 80 stores across the country.
Fire & Flower 2022 Loss and Turnaround
In March, Fire & Flower released its financial results for the fourth quarter and fiscal year ending December 31, 2022. The company reported an $89.5 million loss but noted its turnaround year showing improved retail performance in 2022 and setting it up for a stronger 2023.
The company has had significant net losses of more than $200 million since 2018.