Cirque Du Soleil Bankruptcy: 3,480 Employees Terminated, Stalking Horse Bidder Secured
Cirque du Soleil Entertainment Group has filed for Chapter 15 bankruptcy protection from its creditors under the Companies’ Creditors Arrangement Act and will terminate the employment of about 3,480 workers as it looks to restructure its business.
The Montreal, Quebec-based entertainment company previously furloughed its employees because of the coronavirus back in March. Impacted employees are intended to be rehired as Cirque du Soleil restarts its business, and mandatory COVID-19 shutdowns are lifted in impacted markets, the company said.
Under the bankruptcy filing, Cirque du Soliel has entered into a stalking horse purchase agreement with its stakeholders TPG, Fosun, and Caisse de depot et placement du Quebec. Investissement Québec will serve as its debt provider under the restructuring.
The stakeholders and debt provider will acquire “substantially” all of Cirque de Soleil’s assets in a deal made up of cash, debt, and equity. Under the acquisition, two funds for $20 million will be set up to provide monetary relief for employees and contractors impacted by the Chapter 15 filing.
Through the purchase, if approved by the court, stakeholders will infuse $300 million in liquidity into Cirque du Soleil to help the company restart its operations and assume liabilities such as the cost of ticket sales that were canceled because of coronavirus shutdowns.
Cirque du Soleil’s secured creditors will receive $50 million of unsecured, takeback debt as well as a 45% equity state in the company. They will also receive repayment of a $50 million interim loan.
“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,” Daniel Lamarre, president and CEO of Cirque du Soleil Entertainment Group, said in a statement.
“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. 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.”
Because restrictions in Las Vegas and Orlando have currently been eased, artists and show staff of the company’s Residents Shows Division are not affected by the layoffs. Cirque du Soleil has required the stakeholders and bidders of the company’s assets to provide their intentions for the terminated employees as part of the sale of the company.