A Canadian company known for its immersive art exhibitions featuring the works of van Gogh, Frida Kahlo, Gustav Klimt, and Claude Monet will significantly shrink its operations after filing for creditor protection in Delaware and Ontario.
The Toronto-based Lighthouse Immersive will reduce its operations to four or five venues by the end of September, down from its height of nearly 20.
In court documents filed in Delaware, Lighthouse Immersive cited increased competition from governments lifting restrictions on cultural institutions and multiple competitors as reasons for lower ticket sales. The company also did not have a “solid, long-term chief financial officer or a substantial financial department to keep up with the rapid expansion of the business.” Partner immersive experience company Impact Museums Inc has alleged that Lighthouse owes it $16.6 million, a figure the company disputes.
“Our goal is to emerge from restructuring a stronger company and continue to offer incredible shows to the public,” Lighthouse Immersive spokesperson Nick Harkin told ARTnews in a written statement. “”All of our Lighthouse ArtSpace venues currently operating are still open to the public. Two Lighthouse Immersive affiliate companies are currently undergoing restructuring in Canada. This in no way impacts the operations of our venues or the presentation of currently scheduled shows.”
Lighthouse Immersive and its 10 US affiliates filed for Chapter 15 bankruptcy in Delaware on July 28. The following quotes are from court documents.
A rapidly growing operation
Lighthouse Immersive president and director Corey Ross founded the company in October 2019 with Svetlana Dvoretsky and Slava Zheleznyakov “with the intention of combining our respective talents and passion for the arts to introduce a new form of art into North America”.
The company said it decided to expand after the success of its first exhibition in Toronto in 2020, Immersive van Gogh, after shifting the experience to a drive-in show due to the Covid-19 pandemic. “Lighthouse CA sold out shows seven days a week and months in advance for almost an entire year,” according to the company.
Lighthouse expanded at a “rapid rate” with exhibitions featuring Mozart, King Tut, the Vatican, and the Nutcracker through long-term leases “of varying lengths” in 10 US states. The company said it was able to operate at a “significant profit” for the 2021 calendar year. But, after government restrictions were lifted, Lighthouse Immersive’s exhibitions “no longer had the same overwhelming success” as before as the format “lost its novelty and patrons had other options.”
The financial dropoff for the company’s new productions was also significant. Sales of new shows fell to 10% of van Gogh sales. Development and marketing costs also escalated due to the introduction of more productions “at a rapid pace in 2022”.
The partnership between Lighthouse and Impact for the rapid expansion in shows also had issues, resulting in a settlement agreement. After Lighthouse missed a payment, Impact locked the Canadian company out of three venues. “This caused the Lighthouse group to have to refund approximately $1.5 million in ticket sales and cancel all ongoing ticket sales,” The company wrote in court documents. The filing was first reported by Bloomberg News on July 27.
In June, Lighthouse Immersive abruptly cancelled its immersive exhibition featuring Disney Animation that was scheduled for Houston over the summer.
According to court documents, as of May 31 of this year, Lighthouse had $52.4 million ($70 million Canadian) in total assets and liabilities of $44.5 million ($59.4 million Canadian). The company’s US affiliate had total assets of $53.1 million, but liabilities of $100.2 million, including the $16.6 million litigation claim from Impact Museums Inc.
Lighthouse’s application under the Companies’ Creditors Arrangement Act was affirmed by a judge on July 28. Lighthouse hopes to “stabilize” and “right-size” its business, sell merchandise and equipment, possibly find a new investor, as well as preserve its enterprise value and employees’ jobs.
It was also approved access to a line of credit of up to $1.1-million (plus interest, fees and expenses) from a separate subsidiary owned by Lighthouse’s three co-owners.
The news of the restructuring was first reported by The Globe and Mail Thursday.