Montreal-based Cirque du Soleil Entertainment Group released a statement today that the company was filing for bankruptcy protection as part of a comprehensive plan to restart the business.
The plan features a debt restructuring protection under Companies’ Creditors Arrangement Act (“CCAA”). The restructure includes the termination of 3,480 employees who have been furloughed since March due to government-mandated shutdowns in response to COVID-19. "This termination allows employees to maximize and accelerate the financial compensation that they can obtain" through unemployment assistance programs.
Furthermore, Cirque has entered into a “stalking horse” purchase agreement with shareholders TPG, Fosun, and Caisse de dépôt et placement du Québec, with Investissement Québec as a debt provider. The purchase agreement "sets the floor, or minimum acceptable bid, for an auction" of the entertainment company.
The aforementioned shareholders will "inject $300 million of liquidity into the restructured business." Of the $300 million, $15 million will be dedicated to an employee fund to provide financial assistance to terminated employees, while another $5 million will create a contractor fund to cover outstanding obligations with artisans and freelance artists.
Cirque has requested that potential bidders "specify their intentions with regard to Cirque’s terminated employees, including financial compensation for these employees, the maintaining of the operations in Quebec, and a clear path to rebuilding operations."
“For the past 36 years, Cirque du Soleil has been a highly successful and profitable organization. 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,” states Daniel Lamarre, president and CEO of Cirque du Soleil Entertainment Group. "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.”