Cannapiece Group Inc., Canadian Craft Growers Corp., 2666222 Ontario Ltd., 2580385 Ontario Inc., 2669673 Ontario Inc. and 14707117 Canada Inc.(collectively “Cannapiece” or “debtors”)

On November 3, 2022, Cannapiece Group Inc., Canadian Craft Growers Corp., 2666222 Ontario Ltd., 2580385 Ontario Inc., 2669673 Ontario Inc. and 1477117 Canada Inc.(collectively “Cannapiece” or “debtors”) sought and obtained an initial order (the “Initial Order”) from the Ontario Superior Court of Justice (Commercial List) (the “Court”) pursuant to the Companies’ Creditors Arrangement Act (the “CCAA”). Pursuant to the Initial Order, BDO Canada Limited, (“BDO”) was appointed as monitor of the Companies (the “Monitor”).

The Monitor has also posted on its website a list showing the names of the Known Creditors and amounts owing according to the books and records of the debtors in accordance with the CCAA.

Court Documents

Notices

Sale and Investment Solicitation Process

On November 10, 2022, the Court granted an order (the “Sale Process Approval Order”) which approved, among other things, a sale and investment solicitation process (the “SISP”) and the Stalking Horse Agreement as the Stalking Horse Bid in the SISP.

The SISP is intended to solicit interest in an acquisition or refinancing of the business of the Applicants, or a sale of the assets and/or the business of the Applicants by way of merger, reorganization, recapitalization, primary equity issuance or other similar transaction. The Stalking Horse Bid is intended to provide a degree of certainty in the marketplace for the Applicants, including CPC’s customers and its employees, that a going-concern sale of CPC is a viable outcome of the SISP.

December 1, 2022 – SISP Update: In accordance with the Order of Penny J. issued November 10, 2022 and the approval of the sale and investment solicitation process (“SISP”), the Stalking Horse Purchaser has confirmed that it is assuming the debt owed to secured creditor 2125028 Ontario Inc., which amount is equal to approximately $4,000,000 as of November 8, 2022. The Stalking Horse Purchaser continues to negotiate with secured creditor Carmela Marzilli and has requested an extension to December 7. The Monitor and the Applicants have approved this request and will provide an update on or before December 8, 2022.

December 8, 2022 – SISP Update: On December 1, 2022, the Monitor provided a SISP update indicating that an extension of time was granted in relation to the stalking horse purchaser’s negotiation for the assumption of the Carmela Marzilli debt (the “Marzili Debt”) from November 30, 2022 to December 7, 2022. The stalking horse purchaser has requested a further extension of time to finalize the assumption of the Marzili Debt from December 7, 2022 to December 9, 2022. The Monitor and the Applicants have considered and approved this request and will provide an update on or before December 10, 2022.

December 23, 2022 – SISP Update: On December 12, 2022, the Monitor informed bidding parties that an assumption of the Marzilli Debt (approximate amount of $7 million) had been completed as part of the Stalking Horse Bid transaction (the “Marzilli Assumption”). Please note that the Marzilli Assumption has now been terminated and will NOT form part of the Stalking Horse Bid transaction.

January 18, 2023 – 4:00 PM Update

The Monitor was recently approached by a Potential Bidder with a request to extend the Bid Deadline.
The Company and the Monitor are prepared to support an extension to the Bid Deadline to Friday, January 20, 2023 (12:00 p.m.).

For clarity, the 10% Deposit will be due at the time a Bid is submitted. The required Stalking Horse Payout Amount (as defined in the SISP) is due by January 23, 2023 at 5:00 p.m.

The auction will be scheduled for January 24, 2023 (if required).

The Hearing of the Sale Approval Motion to be scheduled on a date between January 30, 2022 and February 3, 2022, subject to the availability of the Court.

As previously outlined regarding the 2125028 Debt:

“In accordance with the Order of Penny J. issued November 10, 2022 and the approval of the sale and investment solicitation process (“SISP”), the Stalking Horse Purchaser has confirmed that it is assuming the debt owed to secured creditor 2125028 Ontario Inc., which amount is equal to approximately $4,000,000 as of November 8, 2022.

January 23, 2023 Update

Capitalized terms not otherwise defined below, shall have the meaning ascribed to such term in the Court approved Stalking Horse Sales Process.

The Applicants and the Monitor received a qualified bid, in accordance with the terms of the SISP, by the amended Bid Deadline of January 20, 2023 at 12:00 p.m. (the “Qualified Bid”). The Applicants, in conjunction with the Monitor, assessed the Qualified Bid and the Stalking Horse Bid, and determined that the Qualified Bid is the lead bid.

In accordance with the SISP, the Monitor inquired with the Stalking Horse Bidder if it had the intention of participating in the auction; the Stalking Horse Bidder has declined to participate in the auction. As a result, the Qualified Bid is the Successful Bid pursuant to the SISP. The Applicants will now proceed to:
(i) finalize any outstanding items in connection with the Successful Bid, and
(ii) proceed with the Sale Approval Motion and take the necessary steps to close the transaction.

On February 10, 2023, the Court granted an order (the “Approval and Vesting Order”) which approved, among other things: i) the revised share purchase agreement entered in between the Vendor, CPC and 548 and the transaction contemplated therein, and ii) the vesting out of Excluded Liabilities to ResidualCo. – 14707117 Canada Inc. The Court further ordered the title to the CCAA Proceedings changed immediately to:

IN THE MATTER OF THE COMPANIES' CREDITORS
ARRANGEMENT ACT, R.S.C. 1985, c. C-36, AS AMENDED

AND IN THE MATTER OF A PLAN OF COMPROMISE OR
ARRANGEMENT OF CANNAPIECE GROUP INC., CANADIAN
CRAFT GROWERS CORP., 2666222 ONTARIO LTD., 2580385
ONTARIO INC., 2669673 ONTARIO INC., AND 14707117
CANADA INC.

Please contact the Monitor if you have any questions.