Struggling UK CBD company Chill Brands Group PLC has suspended trading of its shares amid a clash among board members and executives.
In a June 10 announcement, the company said it has launched an investigation into two directors who it claims tried to “defraud” the business. Chill has accused Antonio Russo, chief commercial officer, and Trevor Taylor, chief operating officer, of seizing the company’s Chill.com website and transferring £314,000 ($400,000) to their private bank accounts in the United States without approval from the board.
That was after the company said in a June 3 announcement that it halted trading to deal with “allegations that had been raised around the use of inside information” by CEO Callum Sommerton. The allegations left its board “unable to currently provide the market with an accurate update of its financial and trading position,” the company said.
Probe after probe
Russo and Taylor were left in control of Chill after Sommerton was suspended in April. Following an investigation, Sommerton was reinstated as chief executive on June 4 and launched a subsequent probe which discovered the domain and money transfers were made during his suspension.
Chill Brands said investigations ongoing regarding a number of deals related to its vape business, a sector the company entered with new products last year, also contributed to the trading stoppage.
Harry Chathli, non-executive chairman of Chill Brands, said the company’s board was “totally shocked by the extent of destructive behavior and actions of Mr. Taylor and Mr Russo.”
“It is evident that they have not acted in good faith and their actions have been motivated by self-interest rather than for the benefit of the company or its shareholders,” said Chathli. Chill is also investigating to see “if any professional advisers or persons had assisted them in their actions to defraud the business.”
Eric Schrader a non-executive director who had worked as an independent contractor to the company, has stepped down effective June 30, according to the June 10 announcement.
Chill said it will try to recover the money transferred to Russo’s and Taylor’s bank accounts “through all legal means available” and “the Board will take appropriate action in relation to any misfeasance.”
Crashing to earth
Stock in Chill Brands’ was once high-flying. The share price, which hit an all-time peak of £98 ($124) in March 2021, was down to £2.15 ($2.74) when the main market of the London Stock Exchange closed Friday, May 31, the last recorded trading day of the company’s shares.
According to Chill Brands financial statements, the company lost roughly £1.6 million ($2.04 million) from March to September 2023, the period covered by its most recent interim financial statement. That was after the company suffered losses of about £4.3 million ($5.48 million) in the fiscal year March 2022 to March 2023.
Chill has CBD edible and extract products before the UK’s Food Standards Agency’s review process for new or “novel” foods through a consortium operated by the European Industrial Hemp Association. Many CBD companies are counting on authorization of their products to boost their fortunes via the UK’s estimated £690 million ($850 million) market. But a growing number are failing due to pressures from the worldwide crash of the CBD sector that started in 2019 combined with an oft delayed and controversial FSA approval process.
