Debt of 17 million at risk | Gilbert Rozon on the attack to get paid

Gilbert Rozon turns to the courts in the hope of saving the 17 million that he risks losing in the sinking of Just for Laughs (JPR). The founder of the now insolvent humor giant wants to force the group’s American shareholder to pay him the balance of the sale price concluded in 2018.

In a motion filed with the Superior Court of Quebec, the fallen businessman alleges that Creative Artists Agency (CAA), which owns 49% of JPR, is responsible for this debt.

This was one of the terms of the sale that occurred in 2018, the year when Mr. Rozon sold his company for around fifty million in the wake of accusations of sexual misconduct that sparked a lively controversy in addition to splashing the humor specialist that he founded, underlines the document.

“The said sales balance as well as the interest have not been paid,” we can read. [CAA] is jointly and severally liable for all obligations and liabilities towards the plaintiffs. »

These allegations have not yet been proven in court. The legal process is in addition to the auction of JPR, a process supervised by the court under the Companies’ Creditors Arrangement Act (LACC).

Long wait

In the turmoil, Mr. Rozon sold JPR to ICM Partners, which now belongs to CAA, five years ago. To continue to benefit from tax credits from the governments of Quebec and Canada, the American firm subsequently recruited two local shareholders: Bell (26%) and evenko (25%).

At the time, the seller’s shares had been transferred to a numbered company registered at the address of JPR’s head office on Saint-Laurent Boulevard in downtown Montreal. It is because he embodies the “parent company” of this entity that the American shareholder is responsible for the obligations of the latter, alleges the request.

Mr. Rozon and CAA did not want to comment on the legal process.

It was when JPR sought shelter from its creditors that we learned that its founder, through a management company in his name, was still waiting for several million dollars. This debt was considered unsecured by the controller in the file, Christian Bourque, of the firm PwC. Taking into account interest, the complainant claims that he is owed nearly 17 million. The founder of JPR requests payment of this sum as well as interest which will be added until the court decides in this case.

Radio silence

According to the document, CAA’s lawyers were warned, in writing, as early as last November that the payment of the remaining payment was to be made at the end of the year (December 31, 2023). A sign that something was wrong, there seemed to be radio silence at the owner of JPR, who gave no sign of life.

“The buyer’s attorney confirmed that the letter had been forwarded to the buyer and that they would get back to them promptly, which never happened,” the plaintiff alleges.

Two other “compensation notices” were subsequently sent at the beginning of the year (January and February) to JPR’s American shareholder, according to the request. There does not appear to have been a response sent to representatives of the founder of the humor specialist, according to the document.

About a month later, on March 5, JPR filed for bankruptcy by cutting 70% of its workforce – 75 people – in addition to canceling the Juste pour voix/Just For Laughts festival scheduled for next summer. At that time, the company had debts totaling 49 million. There are three secured creditors: the National Bank (17 million), the Business Development Bank of Canada (1.9 million) and the Cultural Enterprise Development Corporation (2.5 million).

Since the JPR debacle, PwC revealed that the group had accumulated losses of around 12 million since CAA, Bell and Groupe CH/evenko took charge.

The Press had also revealed that the three owners had quickly been haunted by their strategy – an acquisition by debt – to get their hands on the fallen comedy giant. Two years after the transaction concluded in 2018, the financial health of the group already left something to be desired in the eyes of its auditor, Deloitte – the firm mandated to scrutinize the finances. JPR was unable to meet its financial ratios with its lenders in 2020. These are indicators that reflect the financial health of a company.

According to the controller’s timetable, JPR’s fate could be sealed in the week of May 13. It is at this time that the successful bids for the group or certain of its assets must be finalized.

With Louis-Samuel Perron, The Press