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The feds are burned out with a medical marijuana grower that it suspects isn't quite taking its bankruptcy case seriously.
A federal court watchdog wants a judge to dismiss the Chapter 11 bankruptcy case of Denver-based CGO Enterprise LLC, arguing that the company shouldn't be allowed to reorganize its finances in a way that would allow it to continue profiting from criminal activity.
U.S. trustee Richard Wieland, who patrols bankruptcy cases for the Justice Department, pointed out that CGO Enterprise executives would likely have to reorganize its operations around sales from its primary asset: $130,000 worth of unharvested marijuana leaves listed on the bankruptcy petition filed May 1 in U.S. Bankruptcy Court in Denver.
Any company's Chapter 11 reorganization plan requires approval from a federal bankruptcy judge–an unlikely consent. Wieland pointed to wording in an earlier bankruptcy case that said a company should have the hope of proposing "a legally and economically feasible plan of reorganization" in his request for the court to throw out the case.
Colorado has legalized medical marijuana and regulates it heavily. A business entity that shares CGO Enterprise's headquarters was denied a license in November to grow pot for a network of licensed retailers throughout the state.
But as states take uncoordinated steps toward recognizing the industry, the federal government still classifies the substance as a dangerous drug.
"It is well known that the cultivation and distribution of marijuana for profit would be a criminal violation of the federal Controlled Substances Act and other narcotics statutes," Wieland said.
Wieland added that shutting down the company under Chapter 7 protection–which would require the court to appoint a liquidator–isn't an option, either.
"Because the primary use of these objects relates to illegal activity, a Chapter 7 trustee cannot administer such assets in a manner that is consistent with law and public policy," he said.
CGO Enterprise itself hasn't given the court any more details about how it hopes to reorganize beyond what it said in its six-page bankruptcy petition. It's the type of silence that can also easily get a company's bankruptcy case tossed.
"Please don't contact me any further regarding this," company attorney Greg Goodman said Thursday in response to a request for comment.
In a signed order, U.S. Bankruptcy Court Judge Michael Romero has given CGO Enterprise President Vince Austin until June 14 to explain to the court why his company filed for bankruptcy and to provide more details on its operations.
The company's bankruptcy filing shielded it from eviction; it owes about $800,000 to its landlords, according to court papers. Attorneys for the landlord have asked for court permission to interview Austin as part of a broader investigation.
News Hawk- Astonr420 420 MAGAZINE
Source: wsj.com
Author: Katy Stech
Contact: Help & Information Center - WSJ.COM
Website: U.S. Trustee Asks To Stub Colorado Pot Grower's Bankruptcy - Bankruptcy Beat - WSJ
A federal court watchdog wants a judge to dismiss the Chapter 11 bankruptcy case of Denver-based CGO Enterprise LLC, arguing that the company shouldn't be allowed to reorganize its finances in a way that would allow it to continue profiting from criminal activity.
U.S. trustee Richard Wieland, who patrols bankruptcy cases for the Justice Department, pointed out that CGO Enterprise executives would likely have to reorganize its operations around sales from its primary asset: $130,000 worth of unharvested marijuana leaves listed on the bankruptcy petition filed May 1 in U.S. Bankruptcy Court in Denver.
Any company's Chapter 11 reorganization plan requires approval from a federal bankruptcy judge–an unlikely consent. Wieland pointed to wording in an earlier bankruptcy case that said a company should have the hope of proposing "a legally and economically feasible plan of reorganization" in his request for the court to throw out the case.
Colorado has legalized medical marijuana and regulates it heavily. A business entity that shares CGO Enterprise's headquarters was denied a license in November to grow pot for a network of licensed retailers throughout the state.
But as states take uncoordinated steps toward recognizing the industry, the federal government still classifies the substance as a dangerous drug.
"It is well known that the cultivation and distribution of marijuana for profit would be a criminal violation of the federal Controlled Substances Act and other narcotics statutes," Wieland said.
Wieland added that shutting down the company under Chapter 7 protection–which would require the court to appoint a liquidator–isn't an option, either.
"Because the primary use of these objects relates to illegal activity, a Chapter 7 trustee cannot administer such assets in a manner that is consistent with law and public policy," he said.
CGO Enterprise itself hasn't given the court any more details about how it hopes to reorganize beyond what it said in its six-page bankruptcy petition. It's the type of silence that can also easily get a company's bankruptcy case tossed.
"Please don't contact me any further regarding this," company attorney Greg Goodman said Thursday in response to a request for comment.
In a signed order, U.S. Bankruptcy Court Judge Michael Romero has given CGO Enterprise President Vince Austin until June 14 to explain to the court why his company filed for bankruptcy and to provide more details on its operations.
The company's bankruptcy filing shielded it from eviction; it owes about $800,000 to its landlords, according to court papers. Attorneys for the landlord have asked for court permission to interview Austin as part of a broader investigation.
News Hawk- Astonr420 420 MAGAZINE
Source: wsj.com
Author: Katy Stech
Contact: Help & Information Center - WSJ.COM
Website: U.S. Trustee Asks To Stub Colorado Pot Grower's Bankruptcy - Bankruptcy Beat - WSJ
