Trustee Alleges Greenrose Board and Lender Conspired to Seize Theraplant in Secret Foreclosure

A newly filed federal bankruptcy lawsuit claims that executives and directors of The Greenrose Holding Company Inc. — the onetime parent of Connecticut cannabis producer Theraplant LLC — conspired with Wall Street lender Silver Point Capital to secretly surrender the company’s key cannabis assets without shareholder approval, effectively wiping out investors and consolidating industry control.

Filed in the U.S. Bankruptcy Court for the Eastern District of New York by Chapter 7 Trustee Robert L. Pryor, the 20-page complaint accuses Greenrose’s directors of breaching fiduciary duty when they approved a so-called “consensual foreclosure” in late 2022 that transferred ownership of Theraplant (CT) and True Harvest (AZ) to Silver Point affiliates operating as DXR Finance LLC.

Alleged Self-Dealing

According to the complaint, Silver Point representatives allegedly offered then-CEO William Harley III a lucrative job and equity in exchange for cooperation. Harley refused and was fired the next day. The trustee says other directors accepted similar incentives — including indemnification, guaranteed positions, and shares in a new company created by Silver Point — before approving the takeover.

Timeline

• 2021: Greenrose borrowed $105 million from Silver Point to acquire Theraplant and True Harvest.
• 2022: Facing cash-flow pressure and a $4.5 million payment, management proposed a $7.5 million rescue financing deal. The board ignored it and moved to foreclosure.
• Nov 10 2022: The Transaction Support Agreement began transferring control to Silver Point.
• Mar 27 2023: A Strict Foreclosure Agreement completed the transfer, giving Silver Point full ownership of Theraplant and True Harvest while directors received legal immunity.

The trustee argues the move violated Delaware General Corporation Law § 271(a), which requires a shareholder vote to sell substantially all corporate assets.

Shareholders Overruled

In January 2023, holders of nearly 59 percent of Greenrose stock executed written consents to remove the board and reinstate Harley as CEO. The board ignored the action and finalized the foreclosure weeks later.

Theraplant Now Profitable Under Lender Control

Connecticut’s adult-use market opened on January 10 2023, with Theraplant as a major supplier. State data show sales climbed from $144.6 million in 2023 to nearly $200 million in 2024. The trustee alleges those profits should have belonged to Greenrose’s bankruptcy estate.

What the Lawsuit Seeks

The trustee is suing for:

1. Breach of Fiduciary Duty (Board members)

2. Aiding and Abetting Breach of Duty (Silver Point affiliates)

3. Violation of Delaware § 271(a)

4. Successor Liability (holding Silver Point responsible for Greenrose’s debts)

A jury trial is demanded. The case is before Judge Alan S. Trust in Brooklyn under Case No. 8-24-72384-SPG. Defendants include board members Jack Falcon, Steven Cummings, John Torrance III, Benjamin Rose, Brendan Sheehan, Tom Lynch, Jarome Fawson, and multiple DXR Finance entities.

If successful, the action could reshape ownership of one of Connecticut’s largest cannabis producers and trigger broader scrutiny of financial maneuvers used to consolidate state licenses under private-equity control.

CT CannaTimes will continue tracking developments in the Greenrose bankruptcy case.