On July 28, Regina-based Minds Eye Entertainment voluntarily applied for bankruptcy protection under the Companies’ Creditors Arrangement Act (CCAA) in Saskatchewan in a bid to restructure and continue with its core business of film and TV production and international distribution.

‘We’ll be a smaller and leaner company,’ says CEO and president Kevin DeWalt, blaming the volatile international markets for the 17-year-old company’s current financial woes. ‘This is a reality of the times and situations that are out of our control.’

Specifically, DeWalt cites the downturn in advertising revenue since Sept. 11, the poor economic climate for exporting programming, currency exchange losses, cutbacks to Canadian television funding, and the general slowdown of the world economy compounded by the war in Iraq.

‘The combination of these events has created a ‘perfect storm’ for the international film and television industry,’ says DeWalt. ‘Once this storm has passed, and I believe it is passing, Minds Eye will be extremely well positioned to return to profitability and deliver growth to our shareholders.’

Previously, in April, Minds Eye laid off 20 people following the collapse of two German coproductions – second seasons of drama series Myth Quest (PBS, 13 x 60) and Just Cause (W/PAX, 22 x 60) – in which the company was involved. Minds Eye’s 2003 volume was dealt a serious blow when none of its three applications to the Canadian Television Fund’s Licence Fee Program succeeded, and only one of three applications to the Equity Investment Program made the cut. Distribution, the main source of revenue for Minds Eye, has also been substantially curtailed by the weak international market, says DeWalt.

Production volumes at Minds Eye in 2003 are expected to fall to less than half of 2002’s $50-million performance, and the company expects to maintain production slates of $20 million to $25 million over the next three years.

Subject to board approval by October, Minds Eye will divest several divisions including Talking Dog Audio Post in Regina, PostMaster Digital Post in Regina and Calgary and Winnipeg-based Buffalo Gal Pictures, which the company acquired in early 2002. Minds Eye will move its development office in Edmonton to head office in Regina, which will also serve as the hub for production and new media, and for distributor Minds Eye International.

Minds Eye plans to sell the divisions to their management teams, says DeWalt. While he expects jobs to be preserved within its divisions, Minds Eye’s employment roster will shrink from 50 to 20 after the divestitures.

In 2001, and later in 2002, Minds Eye raised about $12.2 million toward an aggressive expansion plan that was to include acquisitions, a presence in Toronto and, eventually, an IPO.

Among the investors is the Saskatchewan Government’s Crown Investments Corporation, which to date has invested almost $6.4 million. Other investors include Working Ventures Corporation in Toronto and Crocus Investments Fund in Winnipeg. A planned third round of investment has yet to take place.

‘There was a general consensus that the market was going to turn around,’ says DeWalt about his more optimistic views a couple of years ago. ‘In December, ad stats started to improve, but then the Iraq War put confidence back to Sept. 11 levels. Recovery now seems afoot.’

Minds Eye is currently completing post production on the feature film Whitecoats with Dave Thomas, Falling Angels with Miranda Richardson and Seven Times Lucky starring Kevin Pollak.

-www.mindseyepictures.com