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Illustration: Aïda Amer/Axios

The fate of Cirque du Soleil will be decided in a courtroom, not under the big top.

Driving the news: The live events giant yesterday filed for bankruptcy protection in Canada and confirmed furloughs of around 3,500 employees.

What happened: The coronavirus pandemic decimated the company almost entirely reliant on revenue from live events.

  • Just weeks before the virus hammered North America, Caisse de dépôt et placement du Québec (CDPQ) had increased its stake in the company and its debt was trading just below par.

What now: Cirque's existing private equity owners, including TPG Capital, offered a reorganization plan whereby they'd retain a 55% equity stake.

  • A source says that 26 parties signed nondisclosure agreements with Cirque, but this was the only formal offer received.
  • It includes $300 million in new investment, $200 million of which is debt financing from Investissement Québec.
  • That money also would include the establishment of a $15 million fund for furloughed employees, and a $5 million fund for contractors.

Between the lines: Cirque creditors aren't pleased with an arrangement that would leave them without a controlling interest. They're expected to submit a rival plan today, ahead of a Canadian court hearing.

  • This reflects something that's emerging as a big difference between our current financial crisis and the prior edition: Banks and other lenders are in a much stronger financial position, and seem more interested in fighting to defend their cap table superiority.
  • These conflicts could become more prevalent as bankruptcies continue to rise. As we noted yesterday, there already have been more global corporate defaults in 2020 than in all of 2019.

The bottom line: Neither the private equity firms nor the creditors can really control when Cirque resumes operations. But the "winner" could significantly impact what that resumption looks like, and how many of the 3,500 employees get rehired.

Go deeper

Oct 8, 2020 - World

European countries tighten restrictions as coronavirus cases soar

The Trocadero esplanade, in front the Eiffel Tower in Paris. Photo: Mehdi Taamallah/NurPhoto via Getty Images

The number of coronavirus cases exceeded 6 million in Europe Wednesday, per AFP, as the World Health Organization warns that the continent is experiencing "rising COVID-19 fatigue."

The big picture: Cases are surging across the U.K., France, Italy, Spain and Germany, with records set in several European countries in the past week.

Bryan Walsh, author of Future
Oct 7, 2020 - Health

COVID-19 is accelerating an unfair future

Illustration: Annelise Capossela/Axios

The coronavirus pandemic is revealing entrenched inequalities in everything from health care to economic opportunity.

Why it matters: The growing sense that there is something fundamentally unfair about American life is one of the biggest challenges the country faces. If COVID-19 is permitted to widen those inequalities unchecked, the political and economic ramifications could be dire.

Caitlin Owens, author of Vitals
Oct 8, 2020 - Politics & Policy

Pence's alternative pandemic world

Photo: Eric Baradat/AFP via Getty Images

Vice President Mike Pence described a world in which he and President Trump led Americans' heroic effort to defeat the coronavirus during last night's vice presidential debate. The problem is, he described a world that doesn't exist.

Why it matters: The coronavirus is very much not in control in the U.S., and America's failed response begins with the individual actions of the president and the vice president themselves.