The trustee recommends the closure of all Cinémas Guzzo

The financial situation of Cinémas Guzzo is worse than expected. Earlier this week, the company announced the permanent closure of two of its theaters. The measure was described as necessary to ensure the survival of the family business. However, a report published two days later, on January 22, recommended the closure of all Guzzo Group cinemas.

This is the recommendation of the trustee associated with the accounting firm Raymond Chabot Grant Thornton, Dominic Deslandes, mandated by the Superior Court to supervise the liquidation of the Guzzo Group which is unable to repay debts estimated by the firm at 108 million dollars.

In light of his calculations, Dominic Deslandes judges that not only are the revenues of Cinémas Guzzo insufficient to cover current expenses, but that maintaining operations would only harm its creditors.

Unfortunately, it was noted that revenues were significantly lower than anticipated, to such an extent that those generated did not cover current operating expenses.declared Mr. Deslandes in an interview.

Just for the holiday season from December 20 to January 19 – a supposedly lucrative time of year – the firm reports a deficit of $1.1 million.

In his report, Mr. Deslandes also mentions having noted certain unpaid fees to three landlords, various service providers and private lenders, including the CIBCÉnergir, Bell and Hydro-Québec (in addition to a recent partial payment), Revenu Québec (in deductions at source from employee pay) as well as the CNESSTto name just a few.

Even more worrying, Mr. Deslandes noted that the group is financing itself from its creditors and suppliers by delaying certain payments.

This is why Mr. Deslandes is asking the Court to broaden its mandate to allow him to withdraw from the Guzzo Group its power to operate cinemas and, ultimately, to put an end to their activities, pending a recovery plan.

In light of our report, we cannot let the situation harm suppliers and creditors. We are asking the judge for the chance to close the cinemas to prevent the situation from deteriorating further.

In his most recent decision, Judge Michel Pinsonnault mentioned that the operation of the branches would remain under the control of current leaders.

It’s still exceptional. Usually, when a receiver is appointed, it is the receiver who has the powers to operatecriticizes Mr. Deslandes. But, we had a control of receipts and disbursements to ensure that what was paid corresponded to legitimately payable shares.

An inevitable closure?

Could revenues return to a level where they could cover all current expenses in the near future? I don’t have this visibility at the momentsays Mr. Deslandes.

The Group’s president, Vincenzo Guzzo, nevertheless remains convinced that he will be able to overcome his financial problems following the definitive closure, announced Monday, of the Méga-Plex Marché Central 18, located in Montreal, and the Méga-Plex Saint-Jean 12, which opened its doors three years ago in Saint-Jean-sur-Richelieu.

The Group also drew a line, last November, on the Cinéma des sources, located in Dollard-des-Ormeaux. Of the ten Guzzo Group cinemas opened just a few weeks ago, there are still seven in operation.

If Vincenzo Guzzo did not respond to our interview requests today, he was still on the show on Tuesday Economy zone hosted by Gérald Fillion all seven theaters are profitable over a 13-week period. […] These are cinemas that have always made money, except during COVID.

According to data from Raymond Chabot Grant Thornton, Guzzo cinemas never regained their pre-pandemic turnover.

Guzzo’s revenues fell from $38 million in 2019 to $7.5 million in 2020, the year of the pandemic. In 2023, there would be 31 million.

Questioned by Gérald Fillion on the possible closure of other branches, Mr. Guzzo believes that it is certain thatby removing the loss [occasionnée par les succursales] of the Central Market and Saint-Jean, liquidity will improve and [le Groupe] should no longer be behind in rent for other properties.

Vincenzo Guzzo recognizes the difficulties and even takes part of the blame, but he persists and signs: his group has the means to overcome these problems.

I recognize that we used public funds to try to get out of the liquidity impasse. I don’t want to deny it. This may not be the smartest decision I’ve made as an administrator.he admits before continuing: I think it’s a question of time. I must admit that I find that the receiver wants to rush things.

For his part, Mr. Deslandes believes that the recent closure of three Guzzo branches will not improve the financial situation of the Group in the short term considering all the company’s overdrafts.

It is impossible to predict the revenues that the Group will make in one or two weeksindicates Mr. Deslandes, recalling that there are many factors of uncertainty in the performance of cinemas such as the time of year, the films showing, their success at the box office, etc.

We always try to promote the maintenance of operationshe assures.

For the moment, Mr. Deslandes, who was appointed by the Court as an officer of the Court, must set up a process of soliciting offers for the sale of certain buildings of the Group, which also owns Guzzo Construction and the pizzerias Giulietta.

Will this process allow entrepreneurs to continue operations subsequently, that is what we hope for?indicates Mr. Deslandes.

The next hearing is scheduled for Tuesday. At the same time, Raymond Chabot Grant Thornton will continue its offer solicitation process until February 21.

Mr. Deslandes nevertheless wants to be reassuring. Even if Judge Pinsonnault forces the sale of all Guzzo branches, this does not mean the end of cinemas in Quebec. It depends on the outcome of the process and the interest shown by potential buyershe concludes.

2:41

With information from Louis-Philippe Trozzo