CORE Closure update: Globe and Mail gets some details
The Globe and Mail’s Michael Posner has continued to follow up on the closure of CORE Digital last month. His article from Fridays’s Globe and Mail gives further details behind the FX shops demise.
It looks like the company was further in debt than I’d heard:
The bankruptcy followed a seven-month negotiation involving C.O.R.E., the Royal Bank of Canada and Ontario’s Ministry of Finance. By the middle of March, according to documents filed in Ontario Superior Court, C.O.R.E. was in default on loans, lines of credit and rent to the tune of $7.3-million.
Until then, according to an affidavit sworn by a Royal Bank executive, government officials had indicated a willingness to help C.O.R.E find a solution to its problems. Indeed, said former C.O.R.E. president Ron Estey, the discussions were so advanced that finished documents had been drafted.
Apparently, the Shat was called in. According to the article, William Shatner was still a partner in the company, and himself made numerous calls directly to senior government officials.
The provincial government is sticking by there decision, claiming no formal loan program was available under which C.O.R.E. would have qualified. The point Michael raises, which has been noted elswhere, why did it take the government 7 months to figure that out?
Michaels article says more between than lines than within. He draws a few lines between our province, currently in dept to the tune of $21-billion, but willing to dole out 263 million over the next 10 years to Ubisoft for the promise of 800 jobs, McGuinty himself justifying the move as being “about strengthening the industry we already have here.” and then pointing out what seems obvious to all involved:
“So McGuinty has a quarter of a billion dollars to cede to a foreign company for 800 possible jobs, but can’t underwrite less than $10-million to save 120 existing jobs at C.O.R.E,” said one industry executive. “It’s perplexing.”
So the demise of CORE does indeed remain a mystery. The question is still sitting there, and we won’t likely get an answer. I can understand the provincial government taking a pass on a company they consider a bad risk. But their reasoning is sketchy. They’ve created new programs before, they knew they were going to be upping the tax credit, I’m not convinced the province couldn’t have done something top save those jobs. But, what’s done is done, and sadly, in this instance, it’s CORE Digital.
What has happened to the world when everyone wants failing companies to be bailed out?
And Bill Shatner sounds like a pretty astute businessman considering all the irons he has in the fire, the awards, the press on him, the companies he has helped get rolling, etc. I’ve got to think that if he thought it was a good venture he could have cut a cheque himself to help out CORE or found a number of well-heeled friends in la-la land to cough up a few bucks each if they really wanted an interest in the place.
Let’s hope EA Games and a few others move in to compete with Ubisoft for the local talent just as other companies have done in Montreal and Vancouver as the industry grew.
The Ontario Superior Court under the Bankruptcy Act revealed the damage.
Just a small sample of creditors:
Royal Bank of Canada $7,300,000
Kadev Family Trust $168,554
CAFO Inc $31,587
Imperial Coffee & Services Inc $2,676
Keyframe Digital Productions $25,200
Canadian Film Centre $5,500
The Foundry $28,705
Toronto Hydro $17,441
Super Why Productions $41,854
Total creditors sans RBC, employees & unknowns: $542,634
I am not sure why Super Why is owed money… a loan/advance?
Assets:
Fixed Assets –
Net Book Value: 1,633,976
***Estimated to Realize***: $55,118
Accounts Receivable –
Net Book Value: $171,585
Estimated to Realize: $120,110
OCASE Refundable Tax Credit –
Net Book Value: $5,908,004
Estimated to Realize: $2,203,789
The gov’ will always put money into a “come from away” company that promises more jobs. Chalk it up to gov’ officials still experiencing the “new car smell” of Ubisoft.
“They must know what they’re doing, their Ubisoft”. – one gov’ official might say.
Yet, they don’t know that Ubisoft execs are still human and no better than anyone at CORE.
Their logic stems from working with a faltering company over the last 7 months and since we still live in a hit driven society. No one wants to work with a losing team.
The bureaucrats need to look as good as possible to keep their own jobs. So they’d rather take a risk on a new company, with executives that still look solid, than the existing company that has fallen on shaky ground and needs a tough solution that might make the official look poorly in the eyes of the public.
“Creating jobs” is a better headline that “saving jobs”, ah public perception.
speaking from experience,
Gene
There must be more going on here. If the Province refused helping out an industry business with such a small amount to save 100+ jobs then they must have seen what a lot of people already know. That COREs management and owners take too big a cut of the budgets and as a result the people who actually do the work get forced into unrealistic deadlines which end up costing the company more in the long run. Work is rushed, quality suffers, burnout of talented people, but worse the clients are less satisfied and you start loosing return contracts. People will say it’s the economy, and they would be partially right, but it’s also the senior management and owners who basically are bleeding companies dry at the expense of short term profit over long term quality and success.
It’s doesn’t help that CORE uses Houdini for their 3D rather than other proven and well supported software packages. Houdini may one day be a great 3D tool, but right now it’s a pig that reduces productivity and kicks quality to the curb.