My paper examines the accounting fraud that drove Live Entertainment
of Canada, Inc. (Livent) into bankruptcy. Due to the company’s corporate
structure and the reality of an average 80% failure rate on Broadway, Livent
was most likely doomed to failure from its inception. Unlike its competitors,
who financed productions on a project by project basis, Livent brought
the entire operation under one roof and financed the company through a
public listing on the Toronto Stock Exchange and corporate bonds. By not
employing a limited liability structure on each production, Livent’s losses
were able to reverberate throughout their projects. In order to keep the
company afloat, Livent’s ledgers were materially altered to give the appearance
of profitability to the investment public in order to make their further
debt offerings attractive to the market. The story of Livent and its fall
is made more compelling because of its self-proclaimed stand as a Canadian
company, really the only commercial theatre organisation to move outside
the country’s borders, and its chairman’s boast that they would be able
to bring a new and fresh approach to the production of commercial theatre.
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