Paris-based Cyber Group Studios has stated that there will be a “continuation of the company, despite net assets becoming less than half of the share capital”—an indicator that it could be facing financial difficulties.
On Monday, the studio behind animated series Gigantosaurus (Disney+, Netflix and France TV) filed what’s called a KBIS Extract—which provides a snapshot of a company’s current status—to the Paris Commercial Court.
This document’s meaning is clear and could indicate a serious problem, says Agnès Koetsier, a lawyer with Paris-based law firm Holfran, which specializes in French business law. It says that the studio’s equity (total value) has dropped below 50% of its share capital (the total money raised from selling shares), explains Koetsier.
“This is a warning sign that the company might be facing financial difficulties,” says Koetsier. “It is a signal to both management and shareholders that action may be necessary.”
French law requires a business to take steps when its equity falls below 50% of its share capital, Koetsier adds. These measures could include holding a general meeting of executives to discuss the company’s financial state and decide on corrective action—such as reducing the share capital to match the current equity; increasing the equity through capital contributions; liquidating non-essential assets; or restructuring the company, she says.
Cyber Group has reportedly cut 20 of its roughly 150 staffers. Kidscreen reached out to key executives at the company for comment, but these requests were declined.
Founded in 2005, the studio has raised millions of dollars through private-equity and venture capital funds. Its success with series such as Gigantosaurus (pictured) and Droners (a co-pro with La Chouette Compagnie and Supamonks that’s airing on TF1, Disney and ABC Australia) has propelled international expansion—including opening a US division in 2017 and acquiring Singapore-based Scrawl Animation (2021), Bristol’s A Productions (2022) and Graphilm in Rome (2022).
In a statement to Kidscreen, Katherine McQueen, joint managing director of A Productions, didn’t comment on Cyber Group but did say: “As an independently run studio in a financially sound position, the future of A Productions is secure and we have a robust production pipeline in place.”
Graphilm echoed a similar sentiment in a statement to Kidscreen. “As an independent legal entity Graphilm maintains its solid position in the Italian market and its mission to produce high-quality IPs with international appeal. The company can rely on its own strong and autonomous pipeline of production and new project development.”
Cyber Group isn’t the only French studio feeling the pinch during this market downturn. Paris-based TeamTO declared insolvency on September 17 and is now up for sale, with three potential buyers making purchase offers. And Paris-based Xilam Animation reported disappointing sales of US$12.5 million for the first half of 2024—down 36% compared to the same period last year.
Updated October 28, 2024 with statement from A Productions, and on November 1 with statement from Graphilm.