Arc Productions Ltd.
On August 2, 2016, Arc Productions Ltd. (“Arc”) was placed into interim receivership by order of the Ontario Superior Court of Justice. Deloitte Restructuring Inc. is the interim receiver. To view court documents, orders, reports from the receiver, and other publicly available information with respect to the insolvency proceedings, please visit the website of the receiver by clicking here.
On August 19, 2016, by Order of Justice Newbould, Koskie Minsky LLP was appointed as Representative Counsel to represent the former employees of Arc (the “Arc Employees”) who were terminated as a result of the receivership, in respect of all issues affecting the Arc Employees in the receivership.
In accordance with the Representation Order, a Notice concerning the appointment of Representative Counsel will be sent by mail to all Arc Employees.
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Latest Developments
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February 14, 2017
Letter from Trustee Concerning Proofs of Claim and Meeting of Creditors
We understand that many of the former employees of Arc have received a letter from Deloitte, the Trustee in Bankruptcy of Arc, asking creditors to prove their claims by February 15th.
We have been in touch with the trustee about the letter that was sent and we have confirmed with the Trustee that employees do not need to file their claim by that day. Koskie Minsky will be filing one claim for all amounts owing to the employees. You do not need to take any action at this time.
Koskie Minsky will be filing a placeholder claim prior to the February 15th deadline, which in any event only relates to having standing to nominate and vote on “inspectors” in the bankruptcy. Inspectors are appointed by the creditors of the bankrupt to consult with the trustee about matters that arise in the bankruptcy. We will be nominating an inspector on behalf of the employee group.
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November 3, 2016
On August 22, 2016, the Receiver finalized a sale of the majority of Arc’s assets to Jam Filled Entertainment. The sale to Jam Filled Entertainment did not generate sufficient assets to repay the debt to Arc’s secured creditors. Koskie Minsky understands that there are still some assets remaining to be dealt with, but we do not know whether sufficient funds will be available to pay any amounts owing to employees. Koskie Minsky LLP will continue to monitor the ARC Receivership proceedings, to determine if there are any opportunities for recovery for Arc’s employees from the estate of Arc.
The primary source for recovery for Arc’s employees at the present time is the Wage Earner Protection Program (“WEPP”) process, a federal government program which provides a payment of up to $3,900 to eligible employees whose employer has become bankrupt or entered receivership. In a previous communication, we explained that the deadline to apply for WEPP was September 23rd, 2016, and we understand that many of Arc’s former employees have applied for and received a payment from WEPP. If you have not yet applied for WEPP, even though the deadline has passed but it may still be possible to get a payment from WEPP. Please contact us and we can assist you with completing the application.
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August 25, 2016
Update – Wage Earner Protection Program (“WEPP”)
The Receiver of Arc has sent the former employees of Arc documents in relation to making a claim under the Wage Earner Protection Program (“WEPP”). The WEPP is a government program that provides compensation to eligible former employees for unpaid wages, vacation, severance, and termination pay.
These documents include a calculation of the amount that the Receiver believes that you are entitled to under employment standards legislation in your province.
The maximum amount that a former employee can currently receive under WEPP is $3,907.68. This means that if your claim is greater than this amount, for example $5,000, but you believe that it should be even higher, there is no need to dispute that at this stage. Your claim will be capped at the maximum amount in any event.
It is also important for former employees to know that the amount of their claim under WEPP does not determine their ultimate claim in the estate of Arc. We do not yet know if there will be a claims process or any money to distribute to unsecured creditors. However, should there ultimately be a claims process and you believe that you have a greater claim than that submitted in the WEPP process, it will be possible for additional amounts to be claimed. Former Arc employees who believe that they are entitled to additional amounts or claims, such as for common law damages or employment benefits, will have an opportunity to assert those claims should there be any utility in doing so.
We recommend that you proceed with your WEPP application as soon as possible. The deadline to file the WEPP application is 56 days from the date of the receivership. The first Receivership Order was issued by the court on July 29, 2016. Therefore, the deadline to file the WEPP application is Friday, September 23, 2016. The sooner you submit your WEPP application, the sooner you will be eligible to receive a payment from this program which currently pays up to a maximum of $3,907.68 for 2016.
More information about WEPP is available from Service Canada, at the following address: http://www.servicecanada.gc.ca/eng/sc/wepp//index.shtml
If you have questions in relation to your WEPP application or any other matters, please contact Koskie Minsky LLP.
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August 19, 2016
The Wage Earner Protection Program (WEPP)
We have received a number of questions from Arc employees about whether they should proceed with the WEPP application at this time. We recommend that you proceed with your WEPP application as soon as possible. The deadline to file the WEPP application is 56 days from the date of the receivership. The first Receivership Order was issued by the court on July 29, 2016. Therefore, the deadline to file the WEPP application is Friday, September 23, 2016. The sooner you submit your WEPP application, the sooner you will be eligible to receive a payment from this program which currently pays up to a maximum of $3,907.68 for 2016. For more information on the WEPP, please visit the Government of Canada’s website at http://www.servicecanada.gc.ca/eng/sc/wepp//index.shtml
In addition to the Representation Order, the Receiver brought a motion before the court today for approval of the sale transaction to Jam-Filled Productions of various Arc assets. This transaction was negotiated by the Receiver very quickly following the receivership of Arc. We attach a copy of the Receiver’s Second Report which describes the sale procedure and that the Receiver strongly recommended that the sale be approved. At this time, we do not know the final sale price and will let you know as soon as we can. A number of the elements of the sale transaction were “sealed” by the court as confidential until the transaction closes in order to protect certain commercially sensitive information and also to keep some aspects of the sale confidential in case the transaction does not close and a new purchaser needs to be located.
At this time, it appears that there are significantly less funds available in the estate of Arc to pay all amounts that Arc owes to its creditors, including employees. It has been reported that Grosvenor Park Media Fund LP is the first ranking secured creditor and has first priority on the collateral of Arc and that it is also facing a shortfall on the recovery of all its loan proceeds that it advanced to Arc. We will continue to monitor that situation and report further developments and information as they become known.
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February 14, 2017
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Documents
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Contacts
Toll Free: 416-977-8353
Email: arcrepcounsel@kmlaw.ca
