TWO former joint venture partners in an Eastern European CBD extraction facility are heading to the UK High Court in a $20m dispute over its ownership.
However, both parties are now claiming ownership of the facility and the matter looks like it will be settled by the UK High Court.
Dragonfly Statement Highlights Rift
Details of the fallout first emerged in a terse statement from Dragonfly in early August which read: ‘Dragonfly Biosciences has with immediate effect terminated its 4th December 2018 joint venture agreement with Borganic Inc/Stillcanna Inc and the supply agreement there under.
The termination includes a claim for Stillcanna’s share of the JV plant and a multimillion pound claim for damages’.
Stillcanna Responds In Market Note
It continued: ‘Borganic Consulting had initiated legal action in the UK against Dragonfly Biosciences for contractual breaches under the partnership agreement.
‘The termination includes a claim for Dragonfly’s share of the Joint Venture extraction facility.
‘Proceedings issued in the English High Court have also been served by Borganic today on Dragonfly and also on Ms Radostina Draganova-Nikolova, a director of Dragonfly and general manager of the Joint Venture company.’
It went on to say that it is seeking declarations from the English High Court that: ‘Dragonfly has materially and persistently breached the Joint Venture agreement which constitutes a compulsory transfer event in favour of Borganic.
‘The notice of termination and compulsory transfer event served by Dragonfly on August 3, 2020 is null and void; and Borganic retains ownership in the equipment it has financed at the Joint Venture extraction facility.
Borganic also claims damages against Dragonfly for the losses it has suffered as a result of Dragonfly’s alleged breaches of the Joint Venture agreement.‘
Dragonfly Responds To Stillcanna’s Claims
In response to the claims, Dragonfly told BusinessCann the following: ‘Dragonfly would not ordinarily comment on matters before the court. However, we wish to put on record that it strongly takes issue with the manner in which Stillcanna/Borganic has reported the issues in dispute.
‘We deny that we have acted in breach of the Joint Venture Agreement (JVA) or that Stillcanna/Borganic has any grounds to compel the transfer of Dragonfly’s shareholding in the Joint Venture Company (JVC).
‘Dragonfly has previously served notice on Stillcanna/Borganic requiring the compulsory transfer to it of Stillcanna/Borganic’s share in the JVC on the grounds that Stillcanna/Borganic has itself acted in material breach of the JVA.
‘Stillcanna/Borganic’s assertion that Dragonfly’s notice of termination of the JVA is null and void is a matter to be determined by the High Court.
‘Dragonfly is confident that the validity of the notice will be upheld.
‘Dragonfly also disputes that Stillcanna/Borganic retain ownership in the equipment financed for the JVC. This will also be a matter for the High Court.
‘Ms Radostina Draganova-Nikolova (our co-founder) is a party to the legal action for technical reasons associated with the legal ownership of the shares in the JVC under Bulgarian law.
‘Dragonfly unequivocally deny any wrongdoing on the part of Ms Draganova-Nikolova.
Dragonfly To Issue Counter-Claim
‘Dragonfly will shortly be filing a counterclaim against Stillcanna/Borganic in the High Court proceedings claiming both an order that Stillcanna/Borganic’s share in the JVC be transferred to Dragonfly and substantial damages for breach of the JVA.‘
Dragonfly is one of the UK’s leading CBD companies with large-scale growing facilities in Bulgaria. Its retail range is one of the UK’s best-selling CBD brands and is stocked by top retailers, such as Boots, Tesco, Sainsbury’s and Harrods.
Stillcanna is a Canadian early-stage life sciences company focused on the large scale manufacturing of CBD in Europe.
It recently purchased successful UK cannabis firm Sativa Group PLC and this dispute bears no relationship to this recent transaction.