Canadian Distributor RPM's Bankruptcy Details $6.4M Debt to Major Labels
The majority, $4.1 million, is owed to Universal Music Canada.
Canadian distributor RPM, which filed for bankruptcy last month two weeks after ceasing operation, owes $8.9 million CAD ($6.7 million USD) in liabilities -- the majority of which to Universal Music Canada.
That’s according to a sworn statement filed in an Ontario court on Jan. 25 by Paul Herzog, president of RPM’s parent company Sound City Music Entertainment Inc.
Of the $8,908,796.81 CAD in total liabilities, Canada’s major labels are owed a significant portion: approximately $5.4 million CAD ($4.1 million USD) to Universal Music Canada, $2 million CAD ($1.5 million USD) to Sony Music Canada and $800,000 CAD ($601,081 USD) to Warner Music Canada.
Independent distributors are also out a considerable sum too: Outside Music is owed $127,000 CAD ($95,478 USD); FAB is owed $98,000 CAD ($73,640 USD) and Select is owed $62,000 CAD ($56,584 USD). Only 0.6 percent of RPM’s liability is owed to secured creditors, $55,001 CAD to Ford Credit Canada and Bentall Kennedy (Canada) LP Landlord, $55,000 CAD ($41,319 USD) and $1 CAD ($0.75), respectively.
A Farber & Partners Inc. is the insolvency trustee and will hold the first meeting of the creditors on Feb. 14 at its office in downtown Toronto. Any companies or individuals hoping to recover their monies must fill in a "proof of claim" form before the meeting. "Creditors must prove their claims against the Estate of the Bankrupt in order to share in any distribution of the proceeds realized from the Estate," the notice of bankruptcy states.
The statement of affairs lists RMP’s total assets as $4,454,599.21 CAD ($3,347,169 USD) including $2,585,000 CAD ($1,941,970 USD) in inventory; $1,412,200 CAD in cash ($1,060,942 USD); $138,732.40 CAD ($104,225 USD) in property; $50,000 CAD ($37,563 USD) in machinery, equipment and plant; and $55,000 CAD ($41,319 USD) for vehicles.
The deficiency is $4,455,197.60 CAD ($3,347,169 USD).
On Jan. 7, Herzog sent an email to clients alerting them to the sudden closure.
"To all accounts," it read. "I regret to inform you that RPM Distribution will be closing all operations effective immediately. No orders will be processed moving forward and any existing orders in the system will be canceled.
"All returns on site will be processed and credits will be provided," he continued. "New returns will not be issued or accepted. Limited staff will be here to facilitate and oversee accounts payable/receivables and supplier returns."
Billboard reached out to the heads of the three major labels, as well as Outside Music but did not get a response. Warner Music Canada said it was unable to comment.