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Cirque du Soleil files for bankruptcy protection

The touring entertainment giant has applied for protection under Canada's CCCA, as it seeks to restructure its pandemic-hit business with the help of shareholders

By IQ on 30 Jun 2020

Cirque du Soleil produced The Beatles’ Love, which debuted in 2006

Cirque du Soleil produced The Beatles’ Love, which debuted in 2006


image © Matt Beard

Cirque du Soleil Entertainment Group, the world’s largest producer of contemporary circus and other touring entertainment shows, has filed for bankruptcy protection in Canada after more than three months of “zero revenues” as a result of the Covid-19 pandemic.

Montreal-based Cirque du Soleil announced yesterday (29 June) it has applied to restructure its business under Canada’s CCCA (Companies’ Creditors Arrangement Act – a process that shields it from creditors, similar to administration in the UK or chapter-11 bankruptcy in the US). Its application will heard today by the Superior Court of Quebec.

The announcement follows a particularly torrid quarter for Cirque, which announced thousands of temporary lay-offs in the early days of the pandemic.

Cirque says it has entered into a court-supervised purchase agreement with shareholders, including Texas-based TPG Capital and China’s Fosun Capital Group, to establish two funds, worth US$20 million, to provide relief to laid-off employees and contractors. (Some 3,480 of the more than 4,500 employees furloughed in March are expected to lose their jobs permanently.)

The ‘sponsors’, which also include state-owned investment company Quebec Deposit and Investment Fund (CDPQ), will additionally inject $300m worth of liquidity in order to restart the restructured business.

“I look forward to rebuilding our operations and coming together once again”

“For the past 36 years, Cirque du Soleil has been a highly successful and profitable organisation. However, with zero revenues since the forced closure of all of our shows due to Covid-19, management had to act decisively to protect the company’s future,” comments Daniel Lamarre, president and CEO of Cirque du Soleil Entertainment Group.

Subject to the Superior Court’s approval, the sponsors will also serve as the “stalking horse”, or reserve bidders, in a sale and investment solicitation process (‘SISP’) of Cirque’s assets.

“The purchase agreement and SISP provide a path for Cirque to emerge from CCAA protection as a stronger company. The robust commitment from the sponsors – which includes additional funds to support our impacted employees, contractors and critical partners, all of whom are important to Cirque’s return – reflects our mutual belief in the power and long-term potential of our brand,” continues Lamarre.

“I look forward to rebuilding our operations and coming together to once again create the magical spectacle that is Cirque du Soleil for our millions of fans worldwide.”

 


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