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CannTrust Granted Creditor Protection, Expects Shares To Be Delisted

CannTrust Holdings Inc. (CTST, TRST.TO) said Tuesday that it has obtained a court order that grants it protection from creditors and prevents them from enforcing claims against the company for an initial period of ten days.

CannTrust said that an initial order from the Ontario Superior Court of Justice grants it protection under the Companies' Creditors Arrangement Act or CCAA.

The embattled Canada-based cannabis company also said that trading in its common shares on the Toronto Stock Exchange or TSX and New York Stock Exchange or NYSE has been halted. As a result of it having filed for protection under the CCAA, the company expects its common shares will soon be delisted from trading on the TSX and NYSE.

The company also anticipates that provincial securities regulators in Canada will issue a cease trade order to prevent any trading in the common shares in that country.

CannTrust is struggling to recover after Health Canada last year suspended the company's license to produce and sell recreational and medical cannabis in Canada.
The regulator had found CannTrust to be non-compliant with regulations for growing cannabis in unlicensed greenhouse rooms and also for providing inaccurate information to the regulator.

The company noted that the court order will enable it to complete its remediation plan for its Vaughan facility without disruption, work with Health Canada to resolve compliance issues, and also facilitate the completion of review of strategic alternatives by its board of directors.

"Despite the efforts by CannTrust's management and Board of Directors to preserve the Company's cash liquidity while seeking to restore the Company to operations and resolve the multiple litigations and other contingent claims facing the Company, the Company's future remains uncertain," CannTrust said in a statement.

CannTrust noted that without its cannabis licenses, it has not been able to generate any meaningful revenue since June 2019. The company added that the effects of the COVID-19 pandemic have exacerbated the already difficult circumstances.

The coronavirus pandemic has introduced potential delays in Health Canada's ability to review the company's applications for reinstatement of its Niagara as well as Vaughan licenses. It has also made it even more challenging for the company to attract new financing or a strategic partner, CannTrust said.

As of March 20, 2020, CannTrust had a cash balance of about $145 million.

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