Accusations fly between Benuvia Holdings, Next Frontier Brands

A battle between Benuvia Holdings and Next Frontier Brands is being waged with millions of dollars at stake. At the center of the dispute is the question of who owns what.

The soured relationship began in September 2021, when Next Frontier agreed to buy Benuvia Manufacturing and a membership interest purchase agreement for Benuvia Therapeutics. Next Frontier executed a senior secured promissory note for $26.9 million to do the deal.

Everything seemed to be moving along as planned, but in September 2022, according to a March 2023 lawsuit, Next Frontier quit making the debt payments.

Benuvia blames Next Frontier

Benuvia said it sent Next Frontier a Notice of Default but didn’t accelerate any payments at that time. However it did provide notice of a 1.5% default interest rate charge. By April 2022, it seems Benuvia lost patience and demanded that all the debt obligations be paid immediately.

According to the lawsuit, Benuvia served Next Frontier with another notice of nonpayment by July 2022.

Next Frontier was operating Benuvia Manufacturing, but Benuvia Holdings said the company was behind on rent and vendor charges to the tune of $2.4 million. By August 2022, Benuvia said in the court complaint that the money owed on the promissory note was more than $33 million.

Benuvia said it learned that the assets were on the verge of financial collapse and conducted a public auction of the assets in August 2022, in accordance with the terms of the Senior Secured Note.

Benuvia submitted the winning bid for $8.1 million. After buying the assets back from Next Frontier, Benuvia said it set out to reestablish the business relationships with the company – but, it alleged, Next Frontier repeatedly interfered with that as well.

According to the complaint: “Next Frontier’s CEO, Shannon Soqui, interfered with Benuvia’s business relations with the Acquired Benuvia Assets by representing to Scott Greiper, President of Viridian Capital, that Next Frontier owned and controlled the Acquired Benuvia Assets after the Public Sale. …Soqui interfered with Benuvia’s business relations with the Acquired Benuvia Assets by representing to various third parties interested in buying the Acquired Benuvia Assets that Next Frontier owned and controlled the Acquired Benuvia Assets.”

Greiper declined to comment on the situation.

Benuvia alleges that Next Frontier’s claims on the Benuvia assets have caused confusion in the marketplace as to who owns the property.

Next Frontier points finger at Benuvia

In September 2023, Next Frontier filed its own lawsuit, alleging that it was the other side who behaved badly. In that case, Next Frontier claimed it completed the acquisition of Benuvia Manufacturing Inc. and Benuvia Therapeutics LLC from Benuvia Holdings on Dec. 8, 2021, for $44.9 million, with $18 million paid upfront in cash (including a $1 million deposit) and $26.9 million in debt. Dr. Sud Agarwal was named the CEO at that time.

However, the lawsuit claimed that Agarwal immediately began asking for more compensation. Next Frontier also alleged that Agarwal colluded with members of the Benuvia Holdings LLC (principally Todd Davis and Muna Said) to drive that company into bankruptcy, with the intent of obtaining a controlling interest once a default occurred. According to the filing, Agarwal intentionally neglected to make the debt payments to make the default happen.

This lawsuit alleged that Agarwal also sought to torpedo a $250 million deal with Jupiter Wellness, a special purpose acquisition company. Ultimately that deal was terminated.

The lawsuit also claimed that on March 16, 2022, Agarwal illegally used corporate funds to pay a personal obligation of $141,044.55. The case claimed that Soqui instructed Agarwal to pay that debt personally and to not use corporate funds for the payment. Agarwal is also accused of making two unauthorized $100,000 consultant payments.

By March 2022, Agarwal was terminated as CEO and replaced by Jason Toth.

Amid all these accusations, Benuvia was working on another merger with Pono Capital Corp., a Nasdaq-traded SPAC. This deal was valued at $440 million.

But, the case alleges, parties associated with Agarwal were trying to sink this deal as well. Marilynn Martin, who in a recent wrongful termination lawsuit listed her title as chief of staff, is accused of making unauthorized payments from the company’s accounts, among other allegations, with the same goal as claimed in the other deal.

By August 2022, the Pono Capital deal was terminated as well.

In exhibits to the court filing, Next Frontier indicated that the company conducted an internal investigation that led to Martin’s termination in April 2022 based on false statements she made to Soqui.

Bright Green connection

The pending lawsuits aren’t holding Benuvia back, however. Last week it singed an agreement to acquire DEA-approved cannabis from Bright Green Corp. (NASDAQ: BGXX). Bright Green has claimed for years that it would cultivate such cannabis for research, but to date has not grown or sold any cannabis.

According to the company’s financial filings, it returned its leased cultivation equipment after not making payments. Bright Green now has an accumulated deficit of $49 million.

Benuvia said it intended to leverage Bright Green’s position to produce Schedule I and II raw materials to produce domestically manufactured cGMP pharmaceutical-grade Active Pharmaceutical Ingredients for the U.S. and global markets.