Financial data filed under seal | Guzzo wants to protect himself from the curiosity of the tax authorities

While its creditors are demanding its liquidation, the Guzzo group does not want the public to know the details of its finances. The largest independent owner of cinemas in Quebec also fears seeing the government use the financial data revealed in court, during possible tax appeals against it.

The Guzzo group is trying to block its dismantling under the Bankruptcy and Insolvency Law (LFI). Among its creditors, Quebec and Ottawa are claiming $8.5 million, mainly in withholding deductions from employee pay, which the group kept in its coffers.

Until now, the conglomerate’s financial portraits have remained sealed. To have access to the receiver’s latest report, the tax lawyers even had to undertake not to use it in the context of possible appeals against the group.

“It seemed fair and appropriate to me that the creditors before you could see it, but for the purposes of this hearing, and not to use it for other purposes, which I cannot even define. myself at the time of the conversation,” said Guzzo’s lawyer, Eric Lalanne.

That of the federal government, Kloé Sévigny, did not hear it that way.

“What is being asked of you is to prohibit the minister [du Revenu] to use the report in tax audits and law enforcement, she noted. It is not allowed to extinguish the minister’s powers in this way. »

The lawyer also recalled that these debates take place before the Superior Court, as part of a public trial. “We are asking to put the entire report under seal, even though there would be distinguishable sections that could be accessible to the public,” she said.

The Revenue Canada representative plans to return to the charge on this subject on Tuesday, as does the media lawyer.

Tax numbers lost, then found

As part of the hearing, Revenu Québec’s lawyer also confirmed that Guzzo has been operating its cinemas without being authorized to collect sales taxes since December 11. In principle, a company that finds itself in this situation does not have permission to continue its activities.

“We did not authorize the company to operate,” confirmed Revenu Québec lawyer Éric Labbé.

Guzzo’s lawyer did not deny it: “There is no debate on that, the facts are the facts,” said Eric Lalanne.

The Press reported on Saturday how its reporter was able to attend a performance at the Méga-Plex du Marché Central on Friday noon, even though the group’s tax numbers were revoked.

Revenu Québec’s lawyer, however, clarified that Guzzo ended up reaching an agreement with the tax authorities on Friday evening to be able to continue operating, as CEO Vincent Guzzo also stated at The Press.

Avoid liquidation

The largest independent cinema group in Quebec is trying at all costs to avoid the resale of its small empire in pieces. Its main creditors, CIBC and private lenders, began insolvency proceedings under the BIA in November and together are demanding more than 60 million.

The Press does not know the overall total of debts facing the group, given that Judge Michel Pinsonnault accepted that this information remains under seal for the moment.

To try to convince the judge that the liquidation of his group is not inevitable, Guzzo called Pierre Marchand, an accountant specializing in insolvency from the firm MNP whom the group hired as a consultant, to testify.

According to his conclusion, the restructuring of the group is possible without liquidation. Guzzo should, however, take drastic measures to reduce his losses.

The court, however, issued a publication ban prohibiting the media from specifying what these measures consist of.

As part of his own report produced at the group’s request, accountant Marchand agreed that Guzzo’s bookkeeping is deficient, as his creditors have repeated since their first mortgage appeals at the beginning of the fall.

“Indeed, in certain respects, there are shortcomings in administrative processes which are not all followed according to the rules of the art,” recognized Pierre Marchand. The company does not produce monthly financial statements and there is a lot of information required for sound management that is not produced on a regular basis. »

According to him, the resale of all the Guzzo buildings could bring in 167 million, which would be enough to reimburse the secured creditors.

“No liquidation in full terror”

The parties must meet again on Tuesday for pleadings and representations on the relevance of releasing the receiver’s reports filed under seal, then for pleadings.

“We are moving towards sequestration,” said Judge Pinsonnault before adjourning the hearing. I am not commenting on the merits, but I can already tell you that I am not at all in favor of a full-blown liquidation by secured creditors who are fed up and who have completely lost patience. »

He says he understands their frustration, but points out that Guzzo is a group with significant real estate assets that would allow it to restructure.