Livent

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The Live Entertainment Corporation of Canada, Inc., also known as Livent, was a theatre production company in Toronto, Ontario, begun as a division of the motion picture exhibitor Cineplex Odeon. In 1989, after an internal struggle within the company, Cineplex executives Garth Drabinsky and Myron Gottlieb negotiated to buy the division, which then included the Pantages Theatre, Toronto, and rights to Andrew Lloyd Webber's popular musical The Phantom of the Opera.

Livent joined the mix when the only competition in the major Toronto theatrical world was Mirvish Productions, which was running Les Misérables while Livent's Phantom was running.

Subsequent events[edit]

Insolvency proceedings[edit]

In November 1998, Livent sought bankruptcy protection in the US and Canada, claiming a debt of $334 million.[1]

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 1993–1998.[2] The ruling was upheld by the Ontario Court of Appeal in January 2016,[3][4][5] but in December 2017, the Supreme Court of Canada in Deloitte & Touche v Livent Inc (Receiver of) allowed an appeal in part, declaring that liability existed only in respect of Deloitte's negligence in conducting the audit for Livent's 1997 fiscal year, and accordingly reduced the amount of damages awarded to $40,425,000.[6]

Criminal proceedings[edit]

In January, 1999, Livent's former chairman Garth Drabinsky and president Myron Gottlieb were indicted in the United States District Court for the Southern District of New York on charges they personally misappropriated $4.6 million in company funds and "cooked the books" to hide enormous losses from investors. Arrest warrants are outstanding with respect to the US criminal proceedings,[7][8][9] but double jeopardy rules prevent US extradition proceedings from taking place, because of the conviction in Canadian courts.[10]

On March 25, 2009, Drabinsky and Gottlieb were found guilty of fraud and forgery in Ontario Superior Court for misstating the company's financial statements between 1993 and 1998.[11][12] Drabinsky was sentenced to seven years in jail on Wednesday August 5, 2009 for his role in the case.[13]

Drabinsky filed an appeal in the Ontario Court of Appeal with respect to his sentence on September 3, 2009.[14] During that appeal, he remained free on bail.[15] On September 13, 2011, the Court of Appeal, while upholding the convictions, reduced Drabinsky's sentence to 5 years. Drabinsky appealed to the Supreme Court of Canada, and the application was dismissed without costs on March 29, 2012.[16][17] Drabinsky was originally held at Millhaven Institution for assessment. In December 2011, he was transferred to serve out his sentence at Beaver Creek Institution, a minimum security prison, located in Gravenhurst, Ontario,[18] and was released on day parole in February 2013. Drabinsky was granted full parole on January 20, 2014, and completed his sentence in September 2016.[19]

Civil proceedings[edit]

In 2005, former investors in Livent corporate bonds won a $23.3 million settlement against Drabinsky and Gottlieb in the United States District Court for the Southern District of New York,[20] for which enforcement of the judgment was upheld by the Ontario Court of Appeal in 2008,[21] but the judgment was still unpaid in 2012.[22]

Regulatory proceedings[edit]

In January 1999, Livent reached an administrative settlement with the U.S. Securities and Exchange Commission,[23] while civil and criminal proceedings were simultaneously pursued against Drabinsky, Gottlieb and certain other former Livent employees.[24]

Administrative proceedings were initiated against Livent, Drabinsky and others by the Ontario Securities Commission in 2001,[25] and they were suspended in 2002 until all outstanding criminal proceedings had been completed.[26] In February 2013, the OSC announced that proceedings were to be withdrawn against Livent and another party,[27] and that hearings would take place on March 19, 2013, in the remainder of the matter.[28] Myron Gottlieb and Gordon Eckstein, who were other parties in the proceedings, subsequently entered into settlement agreements with the OSC in September 2014 and May 2015 respectively.[29][30]

in 2017, the Ontario Securities Commission permanently banned Drabinsky from becoming a director or officer of any public company in Ontario. The OSC also prohibited him from acting as an investment promoter, and banned him from trading securities (other than as a retail investor, for trades within his RRSP or through a registered dealer for accounts in his name only).[31][32][33]

References[edit]

  1. ^ Besant, Christopher; Salvi, Lydia. "The Livent CCAA/Chapter 11 Proceedings". Archived from the original on 2014-04-13. Retrieved 2012-03-30. 
  2. ^ Hasselback, Drew (April 6, 2014). "Livent auditor Deloitte ordered to pay $84.8-million for failing detect fraud". Financial Post. , discussing Livent Inc v Deloitte & Touche LLP 2014 ONSC 2176
  3. ^ Perkel, Colin (January 8, 2016). "Court upholds $118-million award against negligent Livent auditor Deloitte". Financial Post. , discussing Livent Inc v Deloitte & Touche 2016 ONCA 11 (8 January 2016)
  4. ^ Joseph, Patricia (January 19, 2016). "Livent v Deloitte: Has The Fat Lady Finally Sung?". thecourt.ca. Osgoode Hall Law School. Archived from the original on January 25, 2016. 
  5. ^ Buckstein, Jeff (March 2016). "Livent ruling seen as game changer for auditing duties". The Bottom Line. Archived from the original on March 6, 2016. 
  6. ^ Deloitte & Touche v Livent Inc (Receiver of) 2017 SCC 63 (20 December 2017)
  7. ^ Furman, Phyllis (1999-01-29). "Show Con't Go On On Lam, Livent Duo Warrant An Appearance". New York Daily News. 
  8. ^ "Warrants Issued for Ex-Livent Partners". The New York Times. 1999-01-29. 
  9. ^ Austen, Ian (2006-10-23). "Fugitive Producer to Offer TV Show". The New York Times. 
  10. ^ Tedesco, Theresa (2011-03-24). "Livent duo not ready to take bow". Financial Post. 
  11. ^ MacFarlane, Janet; Waldie, Paul (2009-03-25). "Livent founders guilty in fraud trial". The Globe and Mail. Toronto. Archived from the original on 2009-03-26. Retrieved 2009-03-25. 
  12. ^ "Ontario Superior Court of Justice Decision -- Between Her Majesty the Queen and Garth Drabinsky et al" (PDF). Toronto Star. Archived from the original (PDF) on 2009-04-11. Retrieved 2009-03-30. 
  13. ^ French, Cameron (August 5, 2009). "Ex-Broadway mogul Drabinsky gets 7 years for fraud". Reuters. 
  14. ^ McFarland, Janet (September 4, 2009). "Drabinsky files appeal of jail sentence". The Globe and Mail. 
  15. ^ Tedesco, Theresa (2011-04-26). "Drabinsky, Gottlieb get another day in court". Financial Post. 
  16. ^ "Docket: 34484 Garth Howard Drabinsky v. Her Majesty the Queen". Supreme Court of Canada. 2012-12-03. 
  17. ^ McFarland, Janet (2012-03-29). "Drabinsky loses appeal bid". The Globe and Mail. Archived from the original on 2012-04-02. 
  18. ^ Knelman, Martin (2011-12-29). "Garth Drabinsky transferred to Beaver Creek minimum security prison". Toronto Star. 
  19. ^ "Garth Drabinsky granted full parole". CBC News. The Canadian Press. January 20, 2014. Retrieved 2017-08-11. 
  20. ^ McKinley, Jesse (2005-02-09). "Executives Must Pay $23.3 Million to Broadway Investors, Judge Says". The New York Times. 
  21. ^ King v. Drabinsky 2008 ONCA 566, 91 OR (3d) 616, 295 DLR (4th) 727 (28 July 2008); leave to appeal dismissed, Garth Drabinsky and Myron Gottlieb v Dorian King and Diane King 2009 CanLII 6003 (12 February 2009), Supreme Court (Canada)
  22. ^ McFarland, Janet; Malone, Paul (2012-08-23). "Livent moguls guilty after lengthy drama". The Globe and Mail. 
  23. ^ "ADMINISTRATIVE PROCEEDING - File No. 3-9806". Securities and Exchange Commission. 1999-01-13. Retrieved 2012-03-30. 
  24. ^ "Litigation Release No. 16022". Securities and Exchange Commission. 1999-01-13. Retrieved 2012-03-30. 
  25. ^ "STATEMENT OF ALLEGATIONS OF STAFF OF THE ONTARIO SECURITIES COMMISSION". Ontario Securities Commission. 2001-07-03. Retrieved 2012-03-30. 
  26. ^ "ORDER" (PDF). Ontario Securities Commission. 2002-11-15. Retrieved 2012-03-30. 
  27. ^ "Notice of Withdrawal: Livent Inc. and Robert Topol". Ontario Securities Commission. February 20, 2013. 
  28. ^ Schecter, Barbara (2013-02-21). "Curtain to rise again for Livent at OSC". Financial Post. 
  29. ^ Schecter, Barbara (2014-09-05). "Livent co-founder Myron Gottlieb reaches proposed settlement with OSC". Financial Post. 
  30. ^ "Gordon Eckstein reaches OSC settlement in Livent fraud case". CTV News. May 22, 2015. 
  31. ^ "In the matter of Garth H. Drabinsky, Myron I. Gottlieb and Gordon Eckstein". Ontario Securities Commission. June 15, 2017. 
  32. ^ McFarland, Janet (June 16, 2017). "OSC bans Garth Drabinsky from becoming director or officer of public company". The Globe and Mail. 
  33. ^ Alexandra, Pozadski (June 16, 2017). "Former theatre mogul Garth Drabinsky banned from becoming director or officer of public company". Toronto Star. 

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