Cash-strapped theatre group preparing repayment proposal

The next couple of weeks will be the turning point for Central Alberta Theatre.

The next couple of weeks will be the turning point for Central Alberta Theatre.

Knowing that it’s unable to repay the entire $800,000 that’s owed to creditors, the cash-strapped amateur theatre group has hired a trustee to evaluate the operation and make an “achievable” repayment proposal to those owed money by the group.

Lawrence Hobbs, CAT’s first vice-president, said creditors will have a choice of either accepting the proposal, and receiving at least some of the money they are owed, or not accepting it.

If most creditors refuse the proposal, bankruptcy will result. Hobbs said in this “worst-case scenario,” the 42-year-old group would officially fold, leaving the Memorial Centre without an operator, and most creditors out of pocket for virtually everything owed to them.

Since CAT actually owns no buildings, it has no property to liquidate.

The group operates the Memorial Centre, has paid to renovate the connected CAT Studios, and to redo City Centre Stage — a project that went way over budget — but the non-profit group has no title to these buildings, said Hobbs.

The City of Red Deer owns the CAT Studios and Memorial Centre and the Mah family of Red Deer owns the City Centre Stage Building, which was only leased by the theatre group.

Most of what can be sold if CAT folds is some lighting and sound equipment, said Hobbs. “I would hope the creditors would accept the (trustee’s) proposal to at least get something back on the dollar, but we’ll see.”

Hobbs, a management consultant, intends to go back to Red Deer city council in two weeks to ask for $60,000 in bridge funding to hire the staff needed to continue operating the Memorial Centre.

Hobbs will bring forward the solvency plan that city council is seeking, as well as a full accounting of previous loans that CAT has repaid over the years, and the investment that the group has made in city-owned facilities.

He stressed that CAT members are extremely unhappy to be in the position of being unable to repay CAT’s full debt load. For many of the elderly members, especially, this was an extremely difficult realization to come to, he said. “But we have no choice.”

The group got into financial trouble by taking on the City Centre Stage lease and renovation, with its spiralling costs. Money is owed to a bank, a builder, the landlord and other creditors.

In hiring the trustee, Lawrence said CAT has effectively gotten out of the long-term lease to pay the Mah family $11,000 a month to use the downtown former movie house-turned live theatre space.

The lease was unsustainable for the group and one that CAT never should have entered into, said Hobbs, a management consultant who recently moved to the city from Calgary and joined the non-profit’s board.

The rest of CAT’s plays this season, with the possible exception of the Christmas show, will be staged in the 60-person Nickle Studio. Hobbs said selling out seats in the smaller theatre is preferable to playing to small crowds in the 700-seat Memorial Centre. But, more importantly, he believes the group can make money in the Nickle Studio, with its low overhead. “If we can get through a successful season we can make some money, some net profit.”

While the last fundraiser for CAT, with only a week of lead-up time, was not very well attended, Hobbs said there are other opportunities for raising money.

Hobbs hopes CAT can soon get back to focusing on producing community theatre, which is why the group exists.

If the organization is still together after the trustee makes his pitch to creditors, CAT can proceed with a five-year plan that would see the group producing more diverse shows that would attract a broader audience and younger membership.

Hobbs would like Red Deer’s largest, oldest amateur theatre group to establish partnerships with corporations and other arts groups, including Tree House Youth Theatre and Red Deer College.

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