Photo: Cirque du Soleil
In Canada, the Circus, which is deprived of revenue due to the pandemic COVID-19, turned to the Law on arrangements with creditors of companies (CCAA), a decision which notably resulted in 3480 layoffs
While the recovery plan of the Circus of the Sun is criticized by its creditors, the business of entertainment rather invites them to participate in the auction if they hold to this point to become the new owners.
In the context of a hearing that took place on Thursday last before a bankruptcy court in Delaware, lawyers for the quebec company responded to some of the grievances expressed by the group comprised of 13 institutions, including the toronto firm Catalyst Capital Group, which holds its secured debt of approximately US $1 billion. “There is a very simple solution here, they can participate in the process and we invite them [to do so], argued one of the lawyers who are representing the Circus, Aparna Yenamandra, in a transcription. This is exactly what the process has been established. “
In Canada, the Circus, which is deprived of revenue due to the pandemic COVID-19, turned to the Law on arrangements with creditors of companies (CCAA), a decision which notably resulted in 3480 layoffs. In the united states, similar protection has been sought — and obtained — from the courts.
There is a very simple solution here, they can participate in the process and we invite them [to do so]
— Aparna Yenamandra
The creditors of the company have poorly digested the purchase agreement entered into with the existing shareholders, the fund texan TPG Capital, the chinese company Fosun and the Caisse de dépôt et placement du Québec. The lenders believe that this proposal should not be considered as the starting point of the auction. They feel that it is rather their offers, which does not provide for financial support of the québec government, and which would leave the international headquarters of Cirque in Montreal, which should be preferred. This is what they wish to be argued at the next hearing scheduled for July 10 in front of the superior Court of Quebec.
If the entertainment business has moved to protect itself from its creditors, it was not to cut the grass under the foot to, according to it, but because its finances would still be tight at the end of the month of September, when the current process must culminate, as the cash is dwindling every week. “The reality is that we had just enough time before us to move forward with their proposal [to lenders],” said M, Yenamandra.
For his part, the lawyer who represents the group of creditors, Evan Fleck, has submitted that the Circus did not need to appeal so quickly to the CCAA proceedings — a decision he called “shocking” for its customers, recalling that emergency funding of US $50 million was obtained in may of last year. Given that there is still money in the coffers, Mr. Fleck questioned why the entertainment company had decided to conclude, hasty way, into a purchase agreement with its current shareholders.
“Up to now, the debtor has not provided any justification, in our opinion, that appears to be credible in order to justify what seems to be a negotiation [otc with its shareholders] “, argued Me Fleck.