Montreal’s Guzzo movie theatres will be closed and put up for sale after a Quebec Superior Court judge ordered the transfer of all the chain’s assets to a court-appointed trustee.
Judge Michel Pinsonnault issued the ruling Wednesday.
The appointed trustee, Raymond Chabot inc., said the best option in order to ensure creditors were paid as much as possible was to shut down all remaining cinemas and sell them.
The insolvency company received the mandate to liquidate Guzzo Cinema’s assets last December, in order to pay back the company’s mounting debt which is around $100 million. In a November decision, it was revealed the company owes $39 million to CIBC alone.
The trustee had until Feb. 27 to put together a report on Guzzo Cinema’s finances and issue recommendations to the court.
However, by Jan. 22, after the company shuttered two of its nine remaining locations, Raymond Chabot inc. asked the court to broaden its power, considering the group’s financial situation “critical and unsustainable.”
The company had already closed another location, Cinéma Des Sources, in the West Island, late last year.
Though Guzzo Cinema’s remaining theatres generate revenue, it’s not nearly enough to allow the company to make due on its financial obligations, Pinsonnault said in his ruling.
The closure of the two locations in Montreal’s Marché Central and in Saint-Jean-sur-Richelieu, Que., also didn’t generate additional liquidity.
After rapid expansion in the Montreal area during the first two decades after Vincenzo Guzzo took over the business from his father in the 90s, an unforeseen event crippled the cinema chain financially, and it appears as if it may not recover.
After the company was put under trusteeship, the court found it incapable of properly managing its finances.
The company would, for example, issue cheques, including payroll, without sufficient funds to back them up in the hopes that more money would come in before creditors cashed them, according to the ruling.
Guzzo Cinemas has been struggling financially for years, wrote the judge, acknowledging that the COVID-19 pandemic dealt it a blow it has yet to recover from.
Raymond Chabot inc. says it will favour a buyer in the movie theatre industry.
Investors wishing to make an offer have until Feb. 21 to express their interest.
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