AYR Wellness: a New York credit bid and a Vancouver wind-down

The one parcel of land named in the order that will end AYR Wellness Inc.'s CCAA proceeding is 21.97 unimproved acres at 1300 State Highway 21 in Cedar Creek, Bastrop County, Texas. AYR bought the land while its application for a conditional cannabis licence in Texas was pending; AYR was not selected and has no operational use for the land, according to Blake Holzgrafe, its interim chief executive and chief restructuring officer. A listing agreement made as of June 16, 2026, and signed for AYR the next day, gives Colliers International Austin, LLC the exclusive right to sell it for an initial twelve months at a 6% commission, per the Second Affidavit of Blake Holzgrafe, July 2, 2026, paras. 1, 6–7, 9, 11. The net proceeds are to go to Odyssey Trust Company, collateral trustee for the holders of AYR's 13% senior secured notes, per the Distribution, Discharge and Termination Order, July 13, 2026, para. 5.

As of October 1, 2025, the AYR Group ran 89 cannabis stores in seven states, 64 of them in Florida, and seven cultivation and production facilities, employed about 1,974 people and sold its own brands, Kynd, HAZE and Later Days, per the First Affidavit of Blake Holzgrafe, Nov. 14, 2025, paras. 15, 18, 24. AYR, continued into British Columbia in 2019, its shares under an Ontario Securities Commission cease trade order since June 5, 2025, per the First Affidavit of Blake Holzgrafe, Nov. 14, 2025, paras. 4, 6, held that business through more than 50 wholly owned U.S. subsidiaries and partial interests in five more. None of the subsidiaries was a petitioner or subject to the relief in the initial order, per the Pre-Filing Report of the Proposed Monitor, Nov. 14, 2025, s. 1.0, para. 2.

On July 13, 2026, Justice P. Walker of the Supreme Court of British Columbia granted a Distribution, Discharge and Termination Order. Besides the listing and the distributions, it approves the monitor's fees, and, once the monitor certifies that the proceeding's work is done, discharges the monitor and the CRO and releases the company's directors, officers and advisers; it also authorizes an assignment into bankruptcy, per the Distribution, Discharge and Termination Order, July 13, 2026, paras. 3–5, 8–12, 15, 17, 20–21, 23.

Why the parent filed alone

Holzgrafe's first affidavit gives the reason for the shape: "Because AYR Group grows and sells cannabis, the U.S. entities within the group cannot access the protection of the U.S. Bankruptcy Code and thus cannot enter a coordinated Chapter 11 proceeding or a Chapter 15 recognition of the CCAA proceedings," per the First Affidavit of Blake Holzgrafe, Nov. 14, 2025, para. 83. The proposed monitor, KSV Restructuring Inc., described the Canadian filing as a "stabilized environment" in which the parent could wind down its remaining assets in Canada while the U.S. subsidiaries completed a UCC sale and state-level liquidations. Among the stay's uses it listed halting U.S. litigation that named AYR as a party and a claims process "that will identify, quantify and resolve potential liabilities of the Directors and Officers," per the Pre-Filing Report of the Proposed Monitor, Nov. 14, 2025, s. 1.0, para. 3; s. 2.4, para. 6.

In the company's account, the group was over-leveraged. It reported a 2024 net loss of about US$362.36 million and total liabilities of about US$946.7 million at March 31, 2025, had breached covenants under the indenture governing its notes, and blamed scarce equity and restricted debt, the unresolved U.S. rescheduling of cannabis, oversupply in many states and turnover in its senior management, per the First Affidavit of Blake Holzgrafe, Nov. 14, 2025, paras. 62, 64, 69, 74–79.

On July 30, 2025, AYR and other group entities signed a restructuring support agreement with holders of 73% of the notes. Some of those holders agreed to lend up to US$50 million to a subsidiary, CSAC Holdings Inc., at 14% a year paid in kind, with commitment, backstop and exit premiums of 10%, 15% and 10%; its US$3,555,000 Tranche B was reserved for a court-supervised wind-down, "including these CCAA proceedings." AYR was not a party to the bridge facility but could draw on it, per the First Affidavit of Blake Holzgrafe, Nov. 14, 2025, paras. 87, 103, 105–107, 112.

After events of default, holders of more than two-thirds of the notes directed Odyssey to accelerate and to sell the collateral publicly under ss. 9-610 and 9-611 of the Uniform Commercial Code. Moelis & Company LLC contacted 53 parties; 40 received the bid procedures and four signed non-disclosure agreements, but no one submitted an indication of interest. With secured obligations under the notes and the bridge facility at about US$325.8 million of principal and US$50.5 million of interest and premiums as of November 10, 2025, the noteholders' credit bid was deemed the successful bid. For cancelling the credit-bid portion of their notes, the holders were to receive all of the new equity of the acquiring entity, subject to dilution by a management incentive plan and the equitization of certain bridge premiums, per the First Affidavit of Blake Holzgrafe, Nov. 14, 2025, paras. 90, 96–98. The master purchase agreement is dated November 14, 2025; the buyer is Arboretum Bidco LLC, "the entity established by the Petitioner's Senior Noteholders as the designated purchaser," per the Second Affidavit of Blake Holzgrafe, July 2, 2026, para. 5(a).

Justice Walker granted the initial order on November 17, 2025, appointing KSV as monitor and Holzgrafe as CRO, with an administration charge of $250,000 and a directors' charge of $500,000, in Canadian dollars. On November 25 the amended and restated initial order raised them to $500,000 and $1,000,000, per the Initial Order, Nov. 17, 2025, paras. 15, 26, 28, 37 and the Amended and Restated Initial Order, Nov. 25, 2025, paras. 26, 37. The directors had made the charge a condition of staying on, and Holzgrafe called the US$2.5 million of coverage expected under AYR's D&O policy "wholly inadequate for an enterprise of the size of the AYR Group with its cross-border operations," per the First Affidavit of Blake Holzgrafe, Nov. 14, 2025, paras. 133–135.

One state at a time

An order of June 15, 2026 extended the stay a third time, to September 30, per the Stay Extension Order, June 15, 2026, para. 2. In the United States, AYR Group's operations and assets in Virginia went to Arboretum Virginia LLC on April 10, 2026, and those in New Jersey, Florida and Nevada to Arboretum subsidiaries on June 1. At the Virginia closing the outstanding Tranche A bridge debt converted into a take-back facility issued by Arboretum, per the Second Affidavit of Blake Holzgrafe, July 2, 2026, paras. 5(a), 16. A subset of corporate employees moved on June 21 and the corporate accounts payable on July 1. The timing of the Ohio and Pennsylvania transfers remained uncertain, though the petitioner expected them before September 30, and the master purchase agreement excluded the Massachusetts assets, an approach the petitioner was evaluating "in light of recent regulatory changes," per the Fourth Report of the Monitor, July 7, 2026, s. 3.1, para. 1(c)–(f).

Of about US$293.2 million of note principal owing at the petition date, at least about US$219.7 million had been cancelled as part of the credit bid amount by July 2, and about US$279.2 million was expected to be once every state-level closing was complete, leaving about US$14 million of principal, plus accrued interest and other amounts. "The AYR Group is not able to repay in full the obligations under the Senior Notes," Holzgrafe swore; the noteholders "are the fulcrum creditor of the Petitioner and are entitled to all residual value of the Petitioner's estate," per the Second Affidavit of Blake Holzgrafe, July 2, 2026, paras. 15, 17.