CiRCA Filing for Bankruptcy?

Rumours have been swirling for weeks that CiRCA will be imminently filing for bankruptcy protection. The mega club, located around the corner from the Scotiabank Theatre and down the street from a Milestones, opened in October 2007 and was initially thought to be the best thing to happen to the Club District in years. But things started to unravel quickly and some suggested the writing was on the wall when founder Peter Gatien ceased relations with the club around March of this year.

Based on information we've gathered, we estimate that earlier this month notices were sent to more than 100 creditors. We managed to track down one creditor (an event promotion company) and received confirmation that a notice was in fact issued and received. We've attempted to get confirmation from CiRCA itself but a call to their offices earlier this week was met with a cheery response claiming that although business was "a bit slow" the company had not filed for bankruptcy.

Should it happen, what a bankruptcy filing will mean for the club and its creditors is still unclear. It's believed that CiRCA will not cease operations, however, and instead simply try to restructure its debt while carrying on business as usual. The web site still indicates a full schedule of events planned through the end of the year.

Talking with former employees and others who had relationships with the club (all of whom asked to be unnamed), we've heard a consistent theme that the club's difficulties likely stem from a combination of an unmanageable rent, too many investors and the unwillingness to follow through on Gatien's initial vision for the club.

Once the vision was abandoned, not only did Gatien depart but a number of other original staffers followed. In August, management gave promoters A.D/D only two days notice that they were terminating Randomland, the club's regular Friday night program, choosing to replace it with a more conventional urban-themed offering.

CiRCA's troubles were also likely a product of the club arriving at the wrong place at the wrong time. The economic recession couldn't have helped and the reputation of the Club District has only continued to decline with most non-905ers (at least those over the age of 23) opting to spend their money at smaller, more intimate clubs and bars on King West, West Queen West, Parkdale and Ossington.

According to club impresario Charles Khabouth, 2009 has been a tough year for the nightclub business. "It's been very up and down. There's a lot of competition out there. I don't like the way a lot of people are competing these days because it's really not very professional. I find a lot of people competing on price - no cover charge, low drink prices. In my opinion lowering the quality of the entertainment, the venues and the service. When you compete that way it brings out a certain crowd."

Khabouth suggested the city may expect to see more club closings early in 2010. "After New Year's there's always two, three clubs that close. For venues that are struggling," he said, "after a couple of snowstorms, you're gone."

Equipment suppliers such as lighting companies are the most likely to suffer if CiRCA closes, Khabouth said. Often companies will purchase expensive gear to lease to a particular client, and, as the club owner observed ruefully, "you know what used equipment is worth."

However, Khabouth believes the biggest losers in any CiRCA bankruptcy will be the employees. "What I see a lot of, when clubs close, is staff getting stiffed."

With contributions from Adam McDowell.