Note 3 - Bankruptcy Filing	6 Months Ended
Jun. 30, 2025
Notes to Financial Statements
Reorganization under Chapter 11 of US Bankruptcy Code Disclosure [Text Block]	NOTE 3 – BANKRUPTCY FILING On November 6, 2024 (the “Petition Date”), the Company’s wholly owned subsidiaries Unrivaled Brands, Inc. (“Unrivaled”) and Halladay Holding, LLC (“Halladay Holding”) (each a “Debtor” and collectively, the “Debtors”) voluntarily filed for relief under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division (“Bankruptcy Court”), bearing case numbers 2:24-bk-19127-BB and 2:24-bk-19128-BB (“Bankruptcy Cases”). The Debtors voluntarily filed for relief under Chapter 11 of the Bankruptcy Code following insolvency and litigation by People’s California, LLC (“People's”). The Chapter 11 filing is limited to Unrivaled and Halladay Holding, meaning only their assets and liabilities are included in the Debtors-in-Possession estates. Blum Holdings, Inc., along with all other operations of the Company are not included in the bankruptcy proceeding and continue operating in the ordinary course of business. As a result of the Chapter 11 filing, the Debtors are now subject to review and oversight by the Bankruptcy Court. As a result, the Company no longer has exclusive control over Debtors’ activities during the Chapter 11 proceedings. Therefore, all assets and liabilities related to the Debtors were deconsolidated as of the Petition Date. Prior to the Chapter 11 filing, the Company issued a guarantee on behalf of Unrivaled and Halladay Holding for accounts payable totaling $6.96 million, which was recorded at fair value. The Debtors jointly filed a liquidating plan on February 4, 2025, and a disclosure statement describing the plan. While the plan and related documents are available on the public docket, the Bankruptcy Court has not approved the disclosure statement as containing adequate information about the plan, nor has the Bankruptcy Court confirmed the plan. Significant Bankruptcy Court Actions In the Bankruptcy Cases, the most active adversarial party has been a creditor, People's, with whom the Debtors were engaged in pre-bankruptcy litigation. Within the first 30 days of the bankruptcy proceedings, the Debtors successfully obtained court approval to sell the real property owned by Halladay Holding free and clear of the disputed liens, claims, and interests asserted by People's. The court-approved sale was finalized on February 14, 2025. On December 16, 2024, the Debtors initiated an adversary proceeding against People's in Bankruptcy Court (Case No. 2:24-ap- 1272-BB) seeking to recover approximately $8.22 million in allegedly avoidable cash transfers made to People's in the two years preceding the bankruptcy filing, pursuant to Bankruptcy Code Sections 544, 547, 548, and 550. On December 17, 2024, the Debtors removed a pre-bankruptcy lawsuit filed by People's against Unrivaled from California State Court to Bankruptcy Court, commencing Case No. 2:24-ap-1274-BB. This case pertains to an attempted foreclosure sale of Halladay Holding’s commercial real property and payments made by Unrivaled to People's under a prepetition settlement agreement. On January 7, 2025, People's filed a motion to dismiss the Debtors’ bankruptcy case. The hearing on that motion was continued multiple times as the parties engaged in settlement discussions, and then voluntarily withdrawn by People’s as part of a global settlement discussed in the paragraph immediately below. On February 12, 2025, the Debtors and People's participated in an in-person mediation and reached a settlement, on March 27, 2025, the parties executed definitive documentation for the terms of the settlement, on May 2, 2025, the Bankruptcy Court signed an order approving the settlement, and on May 16, 2025, the settlement went into effect. Under the settlement terms, all pre-petition litigation and bankruptcy adversary proceedings between the parties were dismissed, People's withdrew its motion to dismiss the bankruptcy case, People's will support the Debtors’ liquidating plan, and a payment of $0.40 million from the sale of the Halladay Holding property was made to People's, with an additional $1.00 million to be subject to an interpleader complaint. The Debtors’ Bankruptcy Cases remain pending with one contested matter pending before the Bankruptcy Court on the issue of whether Unrivaled should be allowed to abandon its equity shares in Mystic Holdings, LLC, which a hearing on this matter was held on August 6, 2025 and will continue on September 3, 2025.

On November 6, 2024 (the “Petition Date”), the Company’s wholly owned subsidiaries Unrivaled Brands, Inc. (“Unrivaled”) and Halladay Holding, LLC (“Halladay Holding”) (each a “Debtor” and collectively, the “Debtors”) voluntarily filed for relief under Chapter 11 of the U.S. Bankruptcy Code (“Bankruptcy Code”) in the U.S. Bankruptcy Court for the Central District of California, Los Angeles Division (“Bankruptcy Court”), bearing case numbers 2:24-bk-19127-BB and 2:24-bk-19128-BB (“Bankruptcy Cases”). The Debtors voluntarily filed for relief under Chapter 11 of the Bankruptcy Code following insolvency and litigation by People’s California, LLC (“People's”). The Chapter 11 filing is limited to Unrivaled and Halladay Holding, meaning only their assets and liabilities are included in the Debtors-in-Possession estates. Blum Holdings, Inc., along with all other operations of the Company are not included in the bankruptcy proceeding and continue operating in the ordinary course of business.

As a result of the Chapter 11 filing, the Debtors are now subject to review and oversight by the Bankruptcy Court. As a result, the Company no longer has exclusive control over Debtors’ activities during the Chapter 11 proceedings. Therefore, all assets and liabilities related to the Debtors were deconsolidated as of the Petition Date. Prior to the Chapter 11 filing, the Company issued a guarantee on behalf of Unrivaled and Halladay Holding for accounts payable totaling $6.96 million, which was recorded at fair value.

The Debtors jointly filed a liquidating plan on February 4, 2025, and a disclosure statement describing the plan. While the plan and related documents are available on the public docket, the Bankruptcy Court has not approved the disclosure statement as containing adequate information about the plan, nor has the Bankruptcy Court confirmed the plan.

In the Bankruptcy Cases, the most active adversarial party has been a creditor, People's, with whom the Debtors were engaged in pre-bankruptcy litigation.

Within the first 30 days of the bankruptcy proceedings, the Debtors successfully obtained court approval to sell the real property owned by Halladay Holding free and clear of the disputed liens, claims, and interests asserted by People's. The court-approved sale was finalized on February 14, 2025.

On December 16, 2024, the Debtors initiated an adversary proceeding against People's in Bankruptcy Court (Case No. 2:24-ap- 1272-BB) seeking to recover approximately $8.22 million in allegedly avoidable cash transfers made to People's in the two years preceding the bankruptcy filing, pursuant to Bankruptcy Code Sections 544, 547, 548, and 550.

On December 17, 2024, the Debtors removed a pre-bankruptcy lawsuit filed by People's against Unrivaled from California State Court to Bankruptcy Court, commencing Case No. 2:24-ap-1274-BB. This case pertains to an attempted foreclosure sale of Halladay Holding’s commercial real property and payments made by Unrivaled to People's under a prepetition settlement agreement.

On January 7, 2025, People's filed a motion to dismiss the Debtors’ bankruptcy case. The hearing on that motion was continued multiple times as the parties engaged in settlement discussions, and then voluntarily withdrawn by People’s as part of a global settlement discussed in the paragraph immediately below.

On February 12, 2025, the Debtors and People's participated in an in-person mediation and reached a settlement, on March 27, 2025, the parties executed definitive documentation for the terms of the settlement, on May 2, 2025, the Bankruptcy Court signed an order approving the settlement, and on May 16, 2025, the settlement went into effect. Under the settlement terms, all pre-petition litigation and bankruptcy adversary proceedings between the parties were dismissed, People's withdrew its motion to dismiss the bankruptcy case, People's will support the Debtors’ liquidating plan, and a payment of $0.40 million from the sale of the Halladay Holding property was made to People's, with an additional $1.00 million to be subject to an interpleader complaint.

The Debtors’ Bankruptcy Cases remain pending with one contested matter pending before the Bankruptcy Court on the issue of whether Unrivaled should be allowed to abandon its equity shares in Mystic Holdings, LLC, which a hearing on this matter was held on August 6, 2025 and will continue on September 3, 2025.