For three months since Cirque Du Soleil completely stopped its shows due to the pandemic
In addition to his events in North America, he also had to suspend 10 tours throughout the world.
So far, the company has been able to gather $ 720 million from investors and equity firms to continue operating.
Perhaps the industry hardest hit by the pandemic paralysis is entertainment. Not only cinemas, amusement parks, concerts, and so on had to come to a complete halt, as potential large-scale contagion factors. Due to their very nature, they have not been considered essential by the authorities, and many have been unable to resume their productions. This implies that companies like Cirque du Soleil are in ruins.
The example of this Canadian entertainment brand is not accidental. According to CNN, Cirque du Soleil has just filed for bankruptcy in its home country. In a letter to the industry, the company’s CEO, Daniel Lamarre, reaffirmed that in its 36-year history, the company has been profitable. However, he noted that the complete stoppage of its events, which resulted in zero revenue for the brand in recent months, has brought it to this point.
The bankruptcy process is expected to help Cirque du Soleil restructure its debt, with the help of the Canadian government and several private investment firms. Some estimates suggest that the entertainment company has accounts payable that amount to a billion dollars. As part of this commitment to reduce the impact of the health crisis, the organization is expected to lay off more than 3,500 employees worldwide.
Cirque du Soleil’s crisis is everyone’s
Unfortunately for the economy, this is just one of many companies that have requested protection from the authorities to deal with their unpaid bills. The Mexican Grupo Famsa requested the restructuring of its debt before the authorities of the United States (USA). Days before, the GNC retailer announced, like Cirque du Soleil, its insolvency and the closure of 1,300 stores. In aeronautics, Latam Airlines since last May is in this position of crisis.
These cases clearly demonstrate which companies and industries are suffering the most from the effects of the pandemic. Entertainment (Cirque du Soleil), retail (GNC), travel (Latam Airlines) certainly suffered during the Great Bull Run. But the most worrying thing is that, even in the reopening of the economies, there does not seem to be a recovery that is fast enough to avoid misfortune. And there are many more brands on this path.
Perhaps most worryingly, brands like Cirque du Soleil were very profitable before the pandemic. This means that not only are those companies that already had a delicate business model a few months ago at risk of disappearing. A totally different configuration of the industry is being seen, which could well negatively affect the market in the long term. The authorities must take radical measures to avoid a future collapse.
Dark prospects for the future
While Cirque du Soleil’s fate is uncertain, there are companies that have been more fortunate and have long garnered the support of their respective governments. For example, a few months ago, Adidas received three billion dollars from Germany to continue. France, for its part, has pledged to irrigate $ 8 billion across its auto industry. Lufthansa was also able to obtain an emergency line valued at $ 9.8 billion.
At the same time, it is increasingly evident that the Cirque du Soleil and similar cases are just the beginning. According to the New York Times, there are increasing and worse risks to the country’s financial stability in the United States. In Japan, according to Japan Times data, the central bank dedicates an extraordinary sum to avoid volatility in local markets. And in Latin America, according to Bloomberg, the actions of Mexico and Brazil can end the progress of years.
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