Blum Holdings, a cannabis company with subsidiaries operating throughout California, announced the filing of a petition for Chapter 11 bankruptcy by its wholly owned subsidiary Unrivaled Brands. The company said the filing comes following a history of “bitter activist litigation" from People’s California and its principals Frank Kavanaugh, Bernard Steimann, and Jay Yadon.
The history of People’s litigation extends back more than two years to July 2022 when People’s filed a breach of contract action followed by its first derivative suit in August 2022 against the then executives and board members of Unrivaled. Later in August 2022, Unrivaled’s Board engaged Adnant, a consulting and accounting firm, and Sabas Carrillo was brought on as an interim CEO. In the two years since Adnant’s engagement and Sabas’s leadership, and despite implacable litigation by People’s, the company’s management was still able to reduce total liabilities by a net of $90.8 million (from $125.3 million as of December 2021 to $34.5 million as of September 2024), execute a corporate reorganization, and pay many deserving vendors.
Now, nearly two years later, People’s has brought almost exactly the same derivative claims again against an entirely new executive team and board members alleging the same breach of fiduciary duty, self-dealing, corporate waste, and unjust enrichment. The latest lawsuit comes after People’s has already received more than $60 million of value from Unrivaled since 2021, including $9 million as recently as July 2024 pursuant to a settlement agreement that should have ended all litigation with People’s and Kavanaugh.
“Kavanaugh’s history of destabilizing companies to seize control and extract assets is well-documented. Unrivaled paid deserving vendors to the best of its abilities while withstanding the barrage of litigation by People’s. Unrivaled saved jobs for two years and operated in communities where businesses deserve to keep their doors open. If you or your company have had a similar experience with Frank Kavanaugh, Fort Ashford Funds, or any of his other affiliates, please reach out,” said Carrillo.
