The Live Entertainment Corporation of Canada, better known as Livent, was a theatre production company based in Toronto, Ontario. Founded in 1989 by former Cineplex Odeon executives Garth Drabinsky and Myron Gottlieb, the company initially found success with its production of The Phantom of the Opera at its Pantages Theatre in Toronto. In 1993, they brought Kiss of the Spider Woman to Broadway, winning the Tony Award for Best Musical. They became known for lavish productions with their 1994 revival of Show Boat (estimated to be the most expensive production in Broadway history at the time), and their ambitious 1998 original musical Ragtime.
In 1998, Livent announced the discovery of "accounting irregularities". Revised financial statements showed previously undisclosed losses, and the company filed for bankruptcy protection. As a result, the company's stock price plummeted, and its assets were eventually sold off in 1999. The company's collapse led to criminal and civil litigation. An Ontario court found that Drabinsky and Gottlieb had systematically doctored Livent's financial statements, and sentenced them to jail terms of several years for fraud and forgery.
At its height, Livent was the largest live theatre company in North America,[1] and was the first publicly traded company dedicated to live theatre. Livent used Toronto as a testing ground for its pre-Broadway tryouts and has been credited (along with its competitor, Mirvish Productions) with elevating Toronto to the second-most important destination for live theatre in North America, and bringing hundreds of millions of dollars of tourism income to the city.
Formation
The company was founded in 1989 by Garth Drabinsky and Myron Gottlieb, former chairman and vice chairman, respectively, of Cineplex Odeon Corporation.[2] Following an internal struggle within the company, the Drabinsky and Gottlieb purchased its live entertainment division for Can$88 million CAD (borrowing $65m to fund the purchase), spawning an independent business, Live Entertainment of Canada Inc. The name, later shortened to Livent Inc., was originally intended as a placeholder (based on the fact that the company was formed from the live entertainment division of Cineplex Odeon), but Drabinsky and Gottlieb ultimately kept it.[4] With the purchase they acquired the Pantages Theatre in Toronto (now known as the Ed Mirvish Theatre) and the Canadian rights to the popular musical The Phantom of the Opera.
Livent became a publicly traded company in May 1993 with a stock offering that raised $40 million.[5] This made it the first publicly traded company whose primary business was live theatre.[6]
Business endeavours
Livent pursued a three-pronged business model which Drabinsky referred to as 'reproduction, restoration, and origination':[5]
In addition, Livent acquired several theatres, beginning in Toronto and expanding to Vancouver, Chicago. Most notably, in 1998, the group built the Ford Center for the Performing Arts in Manhattan, to house the original production of Ragtime on Broadway.
- Reproduction : Acquiring the rights to stage successful current musicals in other markets. Examples included the Toronto production of Phantom of the Opera, and touring productions of Phantom and Joseph and the Amazing Technicolor Dreamcoat
- Restoration : Staging revivals of classic shows such as Show Boat
- Origination : Funding new shows such as the musicals Kiss of the Spider Woman and Ragtime, and the play Barrymore
Spending and accounting practices
Livent became known for its lavish and ambitious productions. Their 1994 revival of Show Boat was speculated to be, at the time, the most expensive production ever on Broadway, with an investment of over US$10 million and ongoing costs of $600,000 per week (a more typical cost for a Broadway revival at the time was around $3 million).
Decline and fall
On April 13, 1998, Garth Drabinsky stepped down as CEO,[9] and was replaced by Michael Ovitz, former president of the Walt Disney Company, who had spent US$20 million for a controlling stake of Livent.[10] On August 10, Livent announced they had discovered serious 'accounting irregularities', and would need to release revised earnings statements going back to 1996. While the irregularities were being investigated, Drabinsky and Gottlieb were suspended as employees, and trading of Livent's stock temporarily ceased. On November 18, 1998, Livent released corrected financial statements for 1996 through the second quarter of 1998, showing that their debts were greater than their assets. The same day, they filed for US bankruptcy protection in a Manhattan court.[11] The company's stock resumed trading November 20, plummeting to a share price of 50 cents from its previous price of Can$10.15 when trading was halted.[12] In August 1999, Livent's assets were sold off to American company SFX Entertainment for an estimated US$97 million.[9]
Subsequent events
Insolvency proceedings
In November 1998, Livent sought bankruptcy protection in the US and Canada, claiming a debt of $334 million.[13][14]
In April 2014, Livent's special receiver obtained judgment against Deloitte & Touche LLP for $84,750,000 in the Ontario Superior Court of Justice, in relation to Deloitte's failure to exercise its duty of care with respect to the audit of Livent's financial statements during 19931998.[15] The ruling was upheld by the Ontario Court of Appeal in January 2016,[16][17]
External links
References
- What was Livent Inc.? The Globe and Mail, 24 March 2009^
- Cineplex Chief Quits The New York Times, December 2, 1989^
- Court told of Livent cheque swap | The Star thestar.com, 26 September 2008