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Artist RightsBusinessStudios

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

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

arcproductions_logo

“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:

arc_newlogo

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:

arcproductions

IF you were an Arc employee, or have any other details to share privately, please contact us.

The news of Arc’s bankruptcy was first reported by TorontoVFXJobs.com.

Updating story…

  • Pantufla Ocho

    Oh I feel bad for all the people who worked there :(

  • ea

    Man, the movies I’d make if I got millions from the government :(

    • Foreign Devil

      Yeah I don’t know if that is accurate. Probably tax breaks. . which means you have to invest millions more to get that money back in tax breaks.

  • bhaumik
  • Sabretruthtiger

    Very, very suspicious. With all that Government money and a confirmed big release something is not being divulged.

  • Matteo Ceccotti

    BrownBag Films in Dublin is always looking for talented artists, and so If you know anyone
    who might be interested, please apply here and mention this post.
    http://www.brownbagfilms.com/jobs
    Thank you and good luck to everyone! :)

  • al bailey

    Rest assured, CEO Tom Murray won’t miss a paycheck…

  • Chicken McPhee

    When I saw the poster for their latest (blazing samurai) I thought I saw it coming.
    They dipped into the lowest common denominator.

  • David Wilson

    Amid, I’m glad you decided to post this information. It helps keep the big boys honest.

    You can vilify studios for any number of reasons- many justifiable. However, receiving Canadian tax breaks isn’t one. You know as well as I do that subsidies and incentives have been a major part of this industry for decades. It’s natural that over the course of several features AND several TV series they receive some major subsidies- if they didn’t they’d be foolish.

    I’m not saying the company went out of business in good form, but the tax breaks aren’t the red flag here. Thanks for the post.

    • AmidAmidi

      Sorry, have to respectfully disagree. Tax breaks and other government incentives mask corporate weaknesses and allow unqualified business owners to sustain the illusion of success for short periods of time (e.g. Fatkat Animation Studios). I’m not saying ARC’s downfall is even related to tax breaks—I suspect there was some kind of gross mismanagement that led to this—but the weaknesses of the company could have potentially been detected earlier on, before they ballooned to hundreds of people, had they not been so heavily reliant on government support.

      • RCooke

        This is VERY true–however I’d have to lay as much blame on the politicians/municipalities (like Port Lucie, Fl./Digital Domain) and those who vote for them for not doing due diligence and research. Especially regarding the financial returns/benefits of such “free money.” Like the majority of taxpayer funded mega sports stadiums, most cities lose money in these deals Many cities and countries are scaling back or eliminating these tax breaks altogether for that reason–a good thing. I’d bet most benefits go to a small cadre of politicians. No surprise there.

  • Capital_7

    The heads at the top never roll. They’ll just start or manage another animation company and screw that up as well.

  • Gizzy Lerms

    I can’t help but wonder what those “best efforts” actually entailed. Maybe communicating the situation to employees so they’d be ready for this outcome would have actually made a difference at least to the people who got screwed over? Those are the people I’m worried about.

    I don’t give a gosh darn about this inept CEO. Maybe he can get a job in customer service at Wal-Mart where his lack of business skills won’t result in people out on the street.

    I know everyone will pull through somehow, but it’s a terrible situation and will cost a lot of people in so many ways. I just wish it cost the people who were messing up instead of the people diligently showing up to work and doing their job.

    “Despite all the free money that the company received from the Canadian government”
    Hahahaha oh my god libertarians are adorable,
    But why would you exploit a shitty situation to promote your political views?
    Not classy. And I have a feeling that’s not how taxes work either.

  • Noël ILL

    just give your employees a break down list of where all the production money went. I think it should be illegal to not release a production breakdown when your company goes bankrupt! Also I love the name of that Veggietales movie, ” The Pirates Who Do Nothing.” Haha! I wonder what studios the companies they animated for will hire now to animate their content. I look forward to any updates.

  • Charles Norwood

    Heartbreaking and horrifying. Please pay attention, young artists. Studios and their management don’t care about you. They’re not your family, they’re not your buddy, they haven’t ‘got your back’. Keep that grain of salt close, and stay nimble.

  • grailpuffin

    In the absence of facts, people are quick to jump to conclusions and point fingers.

    However, let’s just step back and see what details come to light over the next while.
    What we do know is that there must be substantial investment in order to qualify for tax credits, its not just “free money” handed out to anyone.

    Navigating feature film funding is difficult at best, and impossible at its worst. Lenders may have the option to pull the plug if they see their investment is in danger and are attempting to shield themselves from greater exposure and loss. Again, we just don’t really know much at this point at all except Arc has crossed a line where they’ve lost control of the company.

    That being said, my heart goes out to everybody there with hope for brighter days and that new opportunities will surface quickly.

  • J

    Word on the street was they badly misjudged how much their projects would cost, even factoring in the tax credits. They also didn’t have enough talent and so were going on hiring binges to try to meet deadlines. You would hope this would mean that the CEO is now tainted goods in the industry, or at least will be held somewhat culpable for this mess.
    A ton of international VFX workers on visas will now be fucked by this, as they employed a lot of Indian, American, and Australian workers.
    Maybe in the future, VFX firms will at least realize that growing so fast can cause management crises. The clients will never pay enough, but by not growing too huge they probably could have minimized losses and maybe met their due date on one project.

    • Barrett

      Reminds me of the whole Digital Domain sh-tshow that went down in Florida a couple of years ago.

      • Greg Price

        Or PDI/Dreamworks in CA last year

  • Elsi Pote

    Had a friend that just started there, well i better have my guest room ready for him.

    Help out your comrades people!

  • Chad Townsend

    I hope at least everyone was able to pack up their belongings?

    I was laid off from this one studio. one year later the doors were locked and refused entry by the property owners. I know guys that lost so much stuff. the property company auctioned off everything. awful.

    (i knew a guy that broke his way in because he had some pets in a cage)

    WORD OF ADVICE to kids new to the industry. never have more stuff at your desk than you can pack in a bag or small box. you need to be able to grab and go quickly.

    • Man, that’s terrible :/

    • That sucks if they do auction it off against their will.

    • barrett

      I never keep anything too precious to me overnight at work. Hell, even my work files comes with me on a flash drive or portable HDD. (May not be an option due to legal/work agreements for some folks, I know.)

  • Metlow Rovenstein

    Are you planning on making your own IP any time soon, sir?

    • Ricardo Curtis

      Working on it now.

  • D Starr

    You talk about the poor business decisions of the management of your former place of employment, being bombarded with “far too much work” that you couldn’t even use the pool table outside your office, and your relief when your employer went bankrupt. You could simply have chosen to be bold yourself and quit, couldn’t you, or tried to change the organization? Perhaps it’s easier to let the folks in management take the risks, finance the business by taking mortgages, lose sleep and borrow against their family life and marriages, as long as you’re getting paid.

  • Greg Price

    CEOs don’t use their own personal credit to float companies. That’s what incorporation is all about.

  • Greg Price

    Pass laws to prevent it. Keep corporations and their production domestic.