Sports drink company BioSteel filing for creditor protection in U.S. and Canada

The owner of sports drink company BioSteel says it has filed for creditor protection in the U.S. and Canada and is trying to find a buyer for the business.

Ontario-based Canopy Growth, the largest cannabis company in North America, said in a press release Thursday that it has ceased funding BioSteel Sports Nutrition Inc. and that BioSteel has commenced proceedings under the Companies Creditors Arrangement Act.

Companies undergo CCAA when they seek a court's help to protect them from their creditors. That's to ensure orderly proceedings while they either restructure or wind down operations. Alongside the Canadian CCAA proceedings, the company will also undergo creditor protection under Chapter 15 of the U.S. bankruptcy code.

BioSteel was founded in Toronto in 2009 by entrepreneur John Celenza and then-NHLer Mike Cammalleri. The company has a marketing partnerships with numerous NHL players and other notable athletes.

Canopy Growth bought a majority interest in BioSteel in 2019, in the hopes of diversifying its business into drinks, but the growth hasn't worked out as planned. Canopy says BioSteel was responsible for about 60 per cent of its financial losses this fiscal year.

While companies do often shut down completely as a result of CCAA proceedings, they don't always, and for BioSteel it seems like the plan is to find a buyer who wants to run it as an independent company.

The CCAA filing was undertaken because the company "no longer has access to funding for the brand which continued to generate negative operating cash flow," BioSteel said. "BioSteel made the decision to conserve cash and put the business into hibernation to preserve its assets. BioSteel sought creditor protection under the CCAA to conduct a court-supervised sale process for its business and property for the benefit of its stakeholders."