Livent, the troubled Canadian theatrical producing company, may be poised to file for bankruptcy protection in the U.S. and Canada. According to Canada's National Post, Livent has instructed its lawyers to prepare the necessary papers. Chapter 11 proceeding would shield the financially beleaguered company from its many creditors, which include the Bank of Montreal, Fidelity Investments Canada Ltd., and the Canadian Imperial Bank of Commerce.
Livent spokesperson Don Nathan said the company would have an official comment by the end of the day.
Livent was to have released its restated earnings for the past few years by Nov. 13 but has delayed the release until the end of November. The company stated it needed extra time to process all the necessary information. However, a bankruptcy filing may prevent those figures from ever reaching the light of day, according to the National Post.
The accounting firm of KPMG/Peat Marwick began poring over Livent's books for the past few months, after it was revealed that accounting irregularities has occurred during the reign of now-ousted Livent founder Garth Drabinsky.
Livent Chairman Roy Furman has stated that a restating of the company's financial results for 1996, 1997, and the first quarter of 1998 was "virtually certain." Meanwhile, the New York Post reported that Drabinsky is seeking a $6 million severance package from Livent. Livent spokesperson Jim Badenhausen would not comment on that matter.
In other news, Livent has decided to withdraw its claim on 42nd Street's Times Square Theatre. On Aug. 5, Livent signed an option of the playhouse -- the last theatre on the block between Seventh and Eighth avenues to be claimed. The company has since rethought the move. "We determined that our proposal did not deliver sufficient returns for the company," said Furman.
Cora Cahan, president of The New 42nd Street Inc., the non-profit group which oversees the street's theatres, said that several parties has shown "keen interest" in the site. "The Times Square Theater has tremendous potential, and we will move forward quickly to explore various opportunities."
On Oct. 22, an Ontario court struck down one of Drabinsky's legal challenges to KPMG's investigation of the theatre production company's books. On Sept. 16, Drabinsky filed a law suit attacking KPMG, then in the midst of inspecting Livent's books for financial irregularities practiced under Drabinsky's tenure. The impresario also requested that an injunction be placed on KPMG's findings. Livent received KPMG's final report on Oct. 22 after the court approved its delivery.
"This report is what the company has been seeking all along," said Livent officials in a statement, "an objective account of the facts." Drabinsky's suit against KPMG is still pending.
Drabinsky claimed KPMG holds a conflict of interest in the matter, because the firm has been the impresario's personal accountant for 20 years and was also Livent's new management team enlisted to inspect the company's books earlier this year.
Drabinsky, along with Livent co-founder Myron Gottlieb, was suspended on Aug. 10 by the company he helped create. Livent, which was taken over last spring by a new management group headed by Roy Furman and Mike Ovitz, cited accounting regularities totaling in the millions. Furman subsequently named Roundabout artistic director Todd Haimes to take Drabinsky's place.
-- By Robert Simonson