It’s well known that cannabis companies cannot avail themselves of the protections afforded by U.S. Bankruptcy Courts. The National Law Review recently detailed how these courts are doubling down on disallowing cannabis companies to obtain bankruptcy relief.
Ancillary companies that service or provide materials or equipment to cannabis companies are also denied these options by U.S. Bankruptcy Courts. This is very troubling because providing a good or service to a licensed cannabis company should in no way preclude bankruptcy protection. Still, many courts and the U.S. Department of Justice (USDOJ) disagree.
Further, the US DOJ put out a MEMO suggesting why it believes this should be the case. So how does a financially struggling cannabis business utilize the court system to obtain some breathing room or even a chance at redemption and success on a new path? Perhaps the answer lies in the legal concept of a “receiver.”
A receiver is a person appointed as custodian of a person or entity's property, finances, general assets, or business operations. Receivers can be appointed by courts, government regulators, or private entities. Receivers seek to realize and secure assets and manage affairs to pay debts.
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