FK Successfully Represented Curaleaf Holdings
In January of 2022, a subsidiary of Curaleaf Holdings Inc. acquired Bloom Master Fund I LLC, a vertically integrated cannabis operator in Arizona, for a total of $211 million in consideration. In January of 2023, Curaleaf filed an action against the sellers of Bloom, alleging (among other things) breaches of the reps and warranties in the purchase agreement, including that (i) Bloom’s cultivation facility was riddled with mold, which had cost Curaleaf more than $25 million in remediation and lost value and (i) Bloom’s delivery operations had been acting contrary to applicable law, and had been shut down by state regulators, costing Curaleaf more than $10 million in value. Based on these claims, Curaleaf withheld $36.6 million in payments to the Bloom sellers that were due. When the sellers threatened foreclosure based on the withheld payments, Curaleaf moved for a preliminary injunction prohibiting foreclosure while the claim was pending under the terms of the transaction documents. In response, the Bloom sellers filed a counterclaim seeking payment of more than $146 million and seeking the immediate appointment of a receiver to take control of the Bloom assets from Curaleaf. On February 17, 2023, the Court set a hearing on the motion for preliminary injunction and the receivership application was set for March 22, 2023. Over the following weeks, the parties completed extensive discovery, including taking and defending depositions of the most senior executives for both parties and more than a dozen depositions overall. The matter was settled on March 21, 2023, the day before the scheduled hearing. As part of the settlement, Bloom withdrew its threat of foreclosure, withdrew its application for receivership, and agreed to reduce the purchase price of the acquisition by $10 million.
Team Members: Dave Feuerstein, Kieran Ringgenberg, Will Travis
