Cirque du Soleil Files for Bankruptcy Protection; Plans to Rebuild
Cirque du Soleil Entertainment Group announced today that it and certain of its affiliated companies have filed for protection from creditors under the Companies' Creditors Arrangement Act (CCAA) in order to restructure its capital structure. Its application under the CCAA will be heard June 30th by the Superior Court of Québec (Commercial Division) (the "Court"). If the Court grants the initial order sought, the Company will seek its immediate provisional recognition in the United States under Chapter 15 of the US Bankruptcy Code in the United States Bankruptcy Court.
In connection with the filing, Cirque du Soleil announced that it has entered into a "stalking horse" purchase agreement with its existing shareholders TPG, Fosun, and Caisse de dépôt et placement du Québec (the "Sponsors") as well as Investissement Québec as a debt provider, pursuant to which the Sponsors would acquire substantially all of the Company's assets, for a combination of cash, debt, and equity, and would establish two funds totaling US $20 million to provide additional relief to impacted employees and independent contractors.
Under the terms of the proposed Purchase Agreement, the Sponsors will inject US $300 million of liquidity into the restructured business to support a successful restart, provide relief for Cirque du Soleil's affected employees and partners, and assume certain of the Company's outstanding liabilities, including with respect to ticketholders affected by the cancellation of the shows.
The proposed Purchase Agreement further provides, as part of the US $300 million of liquidity, for the creation of a dedicated US $15 million employee fund to provide financial assistance to terminated employees, and a dedicated US $5 million contractor fund to pay outstanding Company obligations to artisans and freelance artists. It also includes key undertakings for the Québec community in which Cirque du Soleil has deep roots, such as maintaining Montréal, Quebec, as the businesses' headquarters, with a view to keeping the core of this important cultural asset in Quebec.
Cirque du Soleil had been working to roll out a new show at Disney Springs before the pandemic hit.
This finance insight was provided by PRNewswire.
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Business, Cirque du Soleil, Disney Springs
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