Renowned Inuit film company drowns in debt

Zacharias Kunuk of Isuma Igloolik Productions Inc. accepting the 2001 Caméra d’Or prize at the Cannes film festival for Atanarjuat, the company’s first feature film. Now, Isuma’s glory days appear to be behind them. A court-appointed receiver is now in charge of the company’s assets. (FILE PHOTO)

(Updated July 8, 3:55 p.m.)

The company that rose to fame through feature films like Atanarujuat, The Journals of Knud Rasmussen and Before Tomorrow has shut down and now lies in financial disarray, public documents filed last month in Quebec superior court reveal.

By Jan. 1, 2011, Isuma Igloolik Productions Inc. ran out of money to pay for salaries, insurance, heating fuel, and office expenses, the court documents said.

Norman Cohn, Isuma’s secretary and treasurer, told Atuqtuarvik Corp., Isuma’s biggest creditor, that Isuma didn’t even have the money to pay for the creation of financial statements for 2010, the documents said.

Isuma now appears to carry debts that appear to range between $700,000 and $900,000, owed to a variety of creditors, the largest of whom are secured. A final accounting and audit of the company’s financial status has yet to be done.

So this past June 7, Atuqtuarvik, an Inuit-owned loan agency based in Rankin Inlet and Isuma’s largest creditor, asked a Quebec court registrar to put Isuma into receivership, saying Isuma owes Atuqtuarvik $513,995.47.

That represents an outstanding loan of $500,000 that Atuqtuarvik made to Isuma on July 14, 2009, plus interest.

On June 9, the Quebec court granted Atuqtuarvik’s application and appointed RSM Richter Inc. as a receiver to act on behalf of Atuqtuarvik and other creditors.

This means the receiver has the right to sell Isuma’s assets to recoup the company’s debts, or continue Isuma’s business activities to add “commercial value” to its assets.

Atuqtuarvik said in its application that it’s using the Quebec superior court because all of Isuma’s financial records and most of its assets are located in Montreal, at three different addresses, on Monkland Ave., Clark Ave. and Crémazie Blvd. East.

The company also owns assets, including video archives, located at a building in Igloolik.

In its application, Atuqtuarvik said it prefers to see Isuma’s assets, including intellectual property rights to its films and videos, sold to a single purchaser who is resident in Nunavut.

And the loan agency said it is “very important” that Isuma’s archives and valuable cultural material be preserved and safeguarded. This includes video interviews with Inuit elders on Inuit history and mythology.

Atuqtuarvik is also a shareholder of Isuma, holding two million class “C” preferred shares.

Atuqtuarvik’s application, accepted by the Quebec superior court, states that Isuma also owes $149,396 to the Baffin Business Development Corp. and $103,500 to the Royal Bank of Canada.

But in an email, Cohn said the RBC debt figure, along with other pieces of information alleged in the Atuqtuarvik application, is incorrect, and that as of this past May 31, Isuma owed only $75,459 to the RBC.

All those debts are secured, which means these creditors would get the first crack at any cash raised by a sale.

The application also states that Isuma owes a total of $249,137 to a variety of unsecured creditors, including the Government of Nunavut, Revenue Quebec, the Receiver General of Canada, the Municipality of Igloolik, and to some of Isuma’s spin-off companies, such as Kunuk-Cohn Productions, Isuma Distribution International, and Kingullit Productions.

Other listed creditors included Alliance Atlantis Broadcasting Inc., who are owed $75,000 at 12 per cent interest per annum, and four separate debts totalling nearly $700,000 owed to the National Bank of Canada. Those debts were secured through use of a special legal pledge called a “hypothec.”

The receiver, Raymond Massi, alleged in a report to the court June 17 that total known claims on Isuma total just under $1.8 million.

But in an email July 8, Norman Cohn said Isuma’s debts to the National Bank and to Alliance Atlantis, totaling $775,000, were repaid by May 30, 2011.

“All $775,000 had been fully repaid before May 31, 2011, the day Atuqtuarvik Corporation requested RSM Richter of Montreal be appointed Receiver by the Quebec court,” Cohn said.

To support this, Cohn supplied Nunatsiaq News with a letter from Catherine Dupuis of the National Bank that confirms repayment of Isuma’s entire debt to the National Bank.

And Cohn said Isuma owes only $3,889 to “outside unsecured creditors,” such as Northwestel, the GN and the Municipality of Igloolik.

The court documents value Isuma’s assets at around $3.7 million, including about $1.2 million for “work in progress.”

One of Isuma’s spin-off projects, www.isuma.tv, is still operating. Isuma TV is an ambitious web-based service offering online video material from indigenous filmmakers, financed partly with money from Heritage Canada and Telefilm Canada.

And Cohn said they’re optimistic about the prospects of Isuma TV and a new company they’ve formed called Kingullit.

“Kingulliit and IsumaTV together allow us to move forward in ways Igloolik Isuma Productions was unable with only limited support from Nunavut agencies,” Cohn said.

All public documents related to Isuma’s insolvency are available at RSM Richter’s website.

01-Motion for Appointment Receiver