Marijuana brand Unrivaled declares bankruptcy in investor feud

California-based marijuana operator Unrivaled Brands, a subsidiary of legacy-era cannabis company Blüm Holdings, filed for Chapter 11 bankruptcy protections, court records show.

The Monday filing represents the latest twist in a yearslong struggle between Unrivaled and one of its investors, Santa Ana-based People’s California, which Unrivaled accused in a Tuesday news release of “implacable … activist litigation” and a bizarre pattern of conduct, including stealing company signage and parking spaces.

The feud between People’s and Unrivaled began in July 2022, when People’s – which manufactures distillate cartridges – filed a lawsuit against Unrivaled alleging breach of contract, according to Tuesday’s release.

Unrivaled’s financial issues

At that time, Unrivaled was deep underwater – with nearly double the liabilities it had in assets – and there were multiple layers of litigation, with Unrivaled also accusing People’s of wrongdoing.

Separately, Unrivaled Brands came under the Blüm Holdings umbrella in January after a corporate reorganization involving a reverse stock split.

Unrivaled became known for operating brands, including the Korova edibles line.

According to Unrivaled’s most recent earnings report, the company had $27.3 million in assets and $34.49 million in liabilities as of Sept. 30.

But an unsatisfied People’s sued Unrivaled in July 2024.

That lawsuit came “after People’s … already received over $60.0 million of value from Unrivaled since 2021, including $9.0 million as recently as July 2024 pursuant to a settlement agreement that should have ended all litigation with People’s and Kavanaugh,” according to Tuesday’s release.

“Despite the settlement agreement, People’s continues to sue for more.”

According to court filings, People’s California is Unrivaled’s main creditor, with $14.8 million in claims.

More allegations

Unrivaled alleged in its release that People’s tried to satisfy this debt in a variety of ways, including:

• “Directing a contractor to steal ‘Blüm’ signage.”
• “Attempting to seize control of Blüm Santa Ana parking spaces in April 2024.”

Further adding to the acrimony: In March, Blüm issued a news release alleging that one of People’s principals had been accused of “sexual molestation of a minor.”

That, in turn, triggered a defamation lawsuit.