It is now official: the assets of the Guzzo group are in liquidation. The Superior Court ordered the sale of its assets to repay creditors: the CIBC bank, private lenders, the government and several owners of buildings housing its cinemas.
Posted at 12:52 p.m.
As judge Michel Pinsonnault announced on Tuesday, CEO Vincent Guzzo and his team, however, maintain control of activities in its projection rooms.
Concretely, the receiver Raymond Chabot will therefore be able to resell the group’s assets in pieces, until the creditors are reimbursed. The order mentions, however, that he must prioritize “the disposition of real estate to the extent possible, all subject to the approval of the Court.”
In other words, Judge Pinsonnault would ideally like the receiver to manage to repay the creditors by selling as few cinemas as possible. He will also have to return to court before proceeding with the transactions.
The largest independent owner of cinemas in Quebec had already been under the supervision of an interim receiver since November 22. On that date, however, Raymond Chabot had only received the mandate to examine Guzzo’s accounts, without being able to control his finances or sell assets.
What is a receivership?
A receiver is a person appointed by the court under the Bankruptcy and Insolvency Law to examine or even manage the property of a third party or a company in financial difficulty. When the court orders a “receivership”, this task usually falls to an insolvency firm, such as Raymond Chabot in the case of the Guzzo group.
Separate accounting for cinemas
For the operation of Cinémas Guzzo during the sale process, the judge orders that separate accounts be kept for its activities.
On Tuesday, the receiver explained that he had held discussions with CEO Vincent Guzzo and his staff to establish revenue forecasts for its ten establishments, all located in the greater Montreal area. They expect revenues of $1.3 million from cinema activities and a surplus of $320,000 after payment of fees, over 13 weeks.
If, contrary to these projections, Guzzo loses money, he will have to answer to the judge, he warns. “The receiver may contact the Court in the event of an operating deficit of the Cinémas Guzzo group in order to report to the Court and obtain the appropriate adjustments. »
Above a certain threshold, the profits of the division will be used to repay the group’s debts in other parts of the company.
The receiver’s latest report is still under seal, even though the judge ordered a redacted copy sent to the media. The total of Guzzo’s debts therefore remains unknown to the public.
The CIBC bank and private lenders are demanding more than 60 million from the group. Quebec and Ottawa are also demanding payment of 8.5 million, largely for source deductions made from employee pay and which Guzzo kept in his coffers.
During the procedures, the tax authorities will also be able to continue their actions against the group to recover their money.
Suppliers and owners of buildings where certain cinemas are located are also demanding tens of millions.
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