Pelorus seeks receivership for California’s StateHouse

Pelorus Fund REIT, LLC filed a complaint in a California court Thursday seeking to place StateHouse Holdings Inc. (CSE: STHZ) (OTCQB: STHZF) into receivership.

The move comes after StateHouse defaulted on four existing loans, according to Pelorus. The private mortgage REIT is requesting the immediate appointment of a receiver to take control of StateHouse’s assets and operations.

“We believe that a court-appointed Receivership will better position StateHouse to more effectively produce and deliver high-quality product for the benefit of its key constituents,” Pelorus CEO Dan Leimel said in a statement.

Leimel said the action “is intended to protect StateHouse employees, customers, business partners and vendors, enabling the business to continue to operate across its production and distribution footprint.”

According to a recent analysis by Viridian Capital Advisors, the company has total debt of $122.79 million and tangible assets valued at $123.47 million. In a situation where the company might need to liquidate assets to repay creditors, Viridian estimated the assets could be worth about 80% of their book value, or $98.78 million. In other words, creditors might recover up to 80 cents on every dollar owed.

Viridian noted that StateHouse consistently ranks as one of the weakest credits in their rankings, making the “generous” high potential workout value surprising.

Pelorus said it’s in communication with StateHouse management and expects their support for the receivership. The lender is urging the Superior Court of California to act quickly in appointing a receiver, “so that StateHouse can be directed towards a cleaner, more efficient and appropriate structure moving forward.”

StateHouse has not yet publicly commented on the filing.

Viridian’s data shows that several cannabis companies are facing high debt levels relative to their market cap. Unlike businesses in other industries, cannabis firms can’t file for bankruptcy protection under federal law due to the plant’s illegal status at the federal level.

“This dramatically increases the uncertainty of how debt workouts will proceed compared to non-cannabis concerns,” the firm wrote.

StateHouse would join a list of some of the once-biggest cannabis companies that have had to pursue receiverships, including Herbl, Skymint and MedMen.