BREAKING: Arc Productions Declares Bankruptcy, Locks Out Hundreds of Employees

By Amid Amidi | 08/02/2016 12:25 am | 29 Comments

Torontos’s Arc Productions shut down its studio today, locking out hundreds of employees and telling them not to come to work on Tuesday.

“We regret to inform you that Arc is experiencing significant financial difficulties and a liquidity crisis,” CEO Tom Murray wrote to his staff in a letter. “Despite the very best efforts of management to find a solution to this financial emergency, we have not been able to resolve this matter with our lender.”

Among other projects, Arc was in production on the feature Blazing Samurai (pictured at top), which is scheduled for release next year by Open Road Films. No word on what will happen to that project. The studio also contributed the production of many series, including the popular Thomas & Friends television and direct-to-video series, Marvel and LEGO animated specials like LEGO Marvel Super Heroes: Avengers Reassembled!, Disney Channel’s Elena of Avalor, and Netflix’s upcoming Tarzan and Jane series.

The studio was known as Starz Animation until 2011, and under that banner had animated Gnomeo & Juliet, 9, and The Pirates Who Don’t Do Anything: A Veggietales Movie. Throughout the years, the company has been awarded tens of millions of dollars in Canadian taxpayer dollars to operate.

On its website, which has now been taken down, Arc touted how its “clients enjoy the benefit of Canadian tax credits, production subsidies and grants.” But despite all the free money that the company received from the Canadian government, it still couldn’t manage to operate within its means.

It’s unclear what went wrong at Arc, but we do know that the studio was aggressively expanding its workforce earlier this year, and even unveiled a new logo in April:

The first sign that something was wrong was last Friday when employees were told they weren’t being paid because of a “glitch.” Now, according to CEO Tom Murray, the company has no money to pay its artists anymore.

“We are still working diligently to find a solution that will allow us to pay outstanding wages due to you,” Murray wrote, “but, in the event that wages are not paid and the Receiver is appointed, there is a federal government program known as the Wager Earner Protection Program where employees of companies that have gone into receivership may be able to make a claim for unpaid wages, severance and vacation pay.” That program only pays up to $3,900 per individual.

Here is the full text of the letter that Murray sent to employees that explains how the lenders intend to take control of the company’s assets this Thursday, August 4: