Adam Jackson
Atlanta-based multistate operator Parallel’s subsidiary, Goodblend Pennsylvania LLC, is attempting to avoid a near $6 million payment relating to a failed grow facility by declaring insolvency, according to a recent complaint filed in a Pennsylvania court.
The new details mark the latest in an ongoing legal battle with multistate cannabis landlord Innovative Industrial Properties Inc. (NYSE: IIPR) over a 20-year rental agreement that was supposed to be worth $68 million.
On top of this, both companies are also dealing with other legal issues brought by their investors.
The main problem now is figuring out what to do with Goodblend. Surterra Holdings Inc., the majority owner of Goodblend and another Parallel-controlled entity, wants to dissolve the limited liability company. But Goodblend’s landlord, a branch of IIP, wants Goodblend to pay the $5.8 million it owes in rent and penalties for not sticking to its lease on a large, 342,000-square-foot facility in Pittsburgh.
While Surterra owns 75% of Goodblend, it cannot dissolve the company without the agreement of the minority owner, Medical Bloom Inc. That company has so far blocked the dissolution for undisclosed reasons.
“Goodblend is insolvent and does not have the funds required to make its lease payments, other creditors (sic) or to continue its operations,” Surterra Holdings stated in its complaint. Medical Bloom has not granted its consent to dissolve Goodblend despite its insolvency, the complaint added.
Surterra is now asking the court to enforce the dissolution, a move allowed under the Pennsylvania Limited Liability Company Act of 1994. That request comes after Goodblend announced it would shut down its Pennsylvania operations and vacate the Pittsburgh facility.
Just over a year ago, Parallel and IIP were celebrating the Pittsburgh facility, which seemed like a big 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, Law360 reported,
When Parallel announced that it would not go public in a deal valued at $1.8 billion, IIP’s value suffered.
The two have had lawsuits lobbed at them consistently since then. Investors sued IIP, arguing that the landlord hasn’t properly vetted its key tenants, with Parallel and Kings Garden being some its biggest busts.
Parallel, on the other hand, has been stuck in several other state courts around the country over securities fraud, including New York, Texas, and Florida. The scope of each has generally been the same – that the company, including former CEO William “Beau” Wrigley Jr. and other executives, coaxed investors into buying debt without revealing its default status or clarifying what the funds would be used for.
