COSTA MESA, Calif. – The Court of Chancery of the State of Delaware has granted an order for sanctions brought against Gold Flora Corporation by the former directors of Left Coast Ventures (“LCV”), a subsidiary of the Company. The Order held the Company and LCV responsible for the payment of certain legal fees that are the subject of advancement orders in connection with LCV’s indemnification obligations to former directors of LCV. The Company’s indemnification obligations under the Order are currently estimated to be approximately US$1.65 million. The Order does not create a full, general receivership over the Company.
On or about March 30, 2021, former directors and shareholders of LCV filed a complaint in the Court against multiple defendant parties, including three former directors of LCV, alleging business torts including breach of duties to LCV and its shareholders. Recently, the plaintiffs filed an amended complaint to add new defendants, including TPCO Holding Corp. and a former director of TPCO. On July 7, 2023, the Company consummated a business combination involving TPCO pursuant to which, among other things, TPCO, Gold Flora LLC, and Stately Capital Corporation amalgamated to create the Company, resulting in the assumption of LCV and TPCO’s indemnification obligations in connection with the defendant directors by the Company.
Pursuant to the Order, the Court appointed Molly DiBianca of Clark Hill PLC as a limited purpose receiver to take such action that the Limited Receiver determines in good faith is appropriate to cause the Company and LCV to satisfy the amounts due under the Order, including accessing financial records and negotiating a payment plan with the former directors pursuant to Title 8, Section 322 of the Delaware General Corporation Law.
The Limited Receiver’s appointment is limited to the Charge and the Limited Receiver will not have authority over the Company except in connection with the Charge. The Limited Receiver will have all powers generally available to a receiver under Section 322 solely with respect to the Charge. The Order provides that the Limited Receiver should first attempt to resort to resolving the Charge through operating cash flow. The initial term for the Limited Receiver will be 59 days from the date of the Order.
About Gold Flora Corporation
Gold Flora Corporation is a female-led, vertically-integrated cannabis leader that owns and operates multiple premium indoor cannabis cultivation facilities, 16 retail dispensaries in strategic geographies, a distribution business selling first party and third party brands into hundreds of dispensaries across California, and a robust portfolio of 8 cannabis brands, including Gramlin, one of the fastest growing brands in the state. The Company’s retail operations include Airfield Supply Company, Caliva, Coastal, Calma, King’s Crew, Varda, Deli, and Higher Level dispensaries, and its distribution company operates under the name Stately Distribution.
