PA Court Orders Dissolution of Parallel’s Subsidiary Over $5.8M Rent Debt

PA Court Orders Dissolution of Parallel’s Subsidiary Over $5.8M Rent Debt

The legal battle between distressed cannabis operator Parallel and its landlord, Innovative Industrial Properties Inc. (NYSE: IIPR), has taken a new turn as a Pennsylvania state court ordered the dissolution of Parallel’s subsidiary, Goodblend Pennsylvania LLC, over its failure to pay $5.8 million in rent and penalties.

Judge Christine Ward of the Allegheny County Court of Common Pleas directed Surterra Holdings, the majority owner of Goodblend and another Parallel-controlled entity, and Medical Bloom Inc., the minority owner, to devise a plan for Goodblend’s dissolution and the disposal of its medical marijuana.

The directive was part of an order signed on Aug. 21 and disclosed publicly on Aug. 24, according to Law 360.

“All assets of Goodblend Pennsylvania LLC, if any, shall be distributed among the creditors and members,” the judge wrote.

Surterra, a subsidiary of Atlanta-based cannabis operator Parallel and the owner of 75% of Goodblend, had filed for the dissolution in July, citing the company’s inability to continue operations. Medical Bloom, which owns the remaining 25%, opposed the request, according to Surterra’s complaint.

The property owner, IIP-PA 8 LLC, had filed a separate lawsuit in February seeking to evict Goodblend due to the accumulating unpaid rent, which reached $5.8 million when Surterra filed for dissolution.

Despite Goodblend ceasing payments to IIP in October 2022, citing financial difficulties, it continued to use the property. This prompted IIP to file a lawsuit in December to get Goodblend to pay the $5.8 million it owes in rent and penalties for not sticking to its lease on the large, 342,000-square-foot facility in Pittsburgh.

Goodblend had argued that it could not simply close and relinquish the keys due to strict state regulations on the possession and management of plants, products, and waste. However, Judge Ward rejected Goodblend’s objection to IIP’s complaint. A hearing for the landlord’s motion to set a trial date was scheduled for September 6.

Although Goodblend informed Judge Ward in June about its reorganization plan, it later announced plans to shut down its Pennsylvania operations and vacate the Pittsburgh facility, which had a 20-year rental agreement worth $68 million. In addition to the processing plant, the company offloaded its two dispensaries and 76 workers.

Pennsylvania law requires Goodblend to provide a 60-day notice of closure, plans for marijuana and extract disposal, and the return of the company’s license to the state, Surterra said in its lawsuit. The company claimed that the dissolution order would facilitate this process.

“Goodblend is insolvent and does not have the funds required to make its lease payments, other creditors or to continue its operations,” the complaint said.

Just over a year ago, Parallel and IIP celebrated the acquisition of the Pittsburgh facility, a seemingly meaningful achievement at the time. Parallel’s subsidiary bought the property for $22 million, sold it to IIP for $41 million the next day, and then Goodblend rented it for 20 years.

However, IIP’s value suffered when Parallel decided not to go public in a deal valued at $1.8 billion. Since then, both companies have faced a series of lawsuits. Investors sued IIP, claiming the landlord failed to properly vet its key tenants, with Parallel and Kings Garden being some of its biggest busts.

Parallel, on the other hand, has been embroiled in several lawsuits across the country over securities fraud, including in New York, Texas, and Florida. The general scope of these lawsuits has been that the company, including former CEO William “Beau” Wrigley Jr. and other executives, misled investors into buying debt without revealing its default status or clarifying what the funds would be used for.

surterra holdings v. medical bloom (goodblend) – order of dissolution

The post PA Court Orders Dissolution of Parallel’s Subsidiary Over $5.8M Rent Debt appeared first on Green Market Report.

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