DMG’s Board of Directors File for Insolvency

During the 2024 Annual General Meeting for DMG, the Board of Directors announced their decision to file for corporate insolvency for the organization. This article is written by the Board and details the events and financial conditions that lead to this decision, what the process entails for DMG, and an FAQ on the topic.

Why is DMG Filing for Insolvency?

The long and the short of it is that DMG has been in severe debt for over a year. In the interest of transparency, the Board has decided to detail the following timeline of events for the public record.

The current Board of Directors was ratified into their roles in March 2023, made up of a team of seven volunteers with a variety of backgrounds. In this past year, four of those members have since resigned for a variety of reasons, some of which include the stress of attempting to rectify this situation. We want to impart on our membership that these statements are made by the remaining Directors and, to the best of their knowledge and research, are accurate and corroborated with internal records. Some knowledge may have slipped through the cracks though, and we are working to build as thorough a picture as we can.

Due to a variety of factors that complicated the handover of custody of the organization, the current Board was unable to create a full and accurate picture of the organizations finances until October 2023. Upon investigating our historic account statements and records of budgets, several key issues became apparent:

• Firstly, the organization was in severe debt, with an effective net worth of below negative $50,000 on average since January 2023. Key contributors to this debt included a $60,000 unpaid CEBA loan, outstanding financial commitments to our second Damage Labs cohort, and several instances of deferred salaries and invoices.
• Secondly, the organization had significant issues with grant funding this past year having only raise $56,000 in 2023 compared to 2022’s $248,000. With grant organizations providing the vast majority of the organizations funding and with those funds coming with stipulations to be spent on programming, DMG had very little funds to pay for operational upkeep, let alone debt relief.
• Thirdly, and perhaps most concerningly, there was severe inaccuracies and inconsistencies in the budgets shared with the Board from past members. It was determined that little financial oversight had been done, and what reporting had been made was inconsistent with the funds in our accounts to the tune of several thousands of dollars.

Since this revelation, the Board has dedicated almost all of it’s time to debt management and relief. These efforts have included but are not limited to the termination of paid staff roles, the cancellation of several software and licensing deals, paying out what debts we’ve been able to, and attempting to end contracts signed prior to this knowledge. Unfortunately, these efforts have proven largely unsuccessful at managing the largest of our debt issues.

Due to the complications of corporate debt, the Board was left with two options – either be forced into insolvency when our debtors come knocking, or voluntarily sign into an agreement. On advice of legal and financial counsel, the Board has chosen the second option.

What does corporate insolvency entail?

Similar to a personal bankruptcy, filing for bankruptcy at a corporate level is a lengthy multistage process that is handled through a Licensed Insolvency Trustee. The following list features some highlights of the process:

• An organization must first determine it is incapable of paying back it’s debts and contact a trustee. We have contracted Albert Gelman Inc. for this process.
• The organization signs off all current assets to the trustee, including physical property and financials. DMG is in the midst of this step at this time.
• A variety of paperwork is filed to notify the government and our creditors about the bankruptcy. Notably at this stage the organization is protected from further legal actions seeking to settle debts, and debt repayment is handled by the trustee.
• The organization then has a bankruptcy on its records with the government. This naturally affects our corporate credit rating, our ability to apply for loans and grants, and other such endeavours. After several years, the debt is absolved, and the records with the government are eventually removed from our records. Should DMG come into cashflow prior from being discharged from our bankrupcty, those assets again go to paying down our debts.

All in all, this process will mean that at least for the foreseeable future DMG will likely struggle to find financial backing and be unable to provide our standard operating services.

It is for this reason the Board is also calling a Special Meeting of the membership to decide on the future of DMG. You can find more information about that process here.

Frequently Asked Questions

Is there any feasible alternative to insolvency for DMG?

Reasonably speaking, no. Any efforts to rebalance our finances are complicated by two major factors: time, and access. Efforts to fundraise our way out of this dilemma are likely roadblocked simply due to the fact that people and organizations with money won’t want to give it to a business just to get them out of debt. Our active membership count has been dwindling, and while we do have a number of good relationships, the time it would take to raise the money we would need to stay in operations will likely be cut short as money comes due. Again, the board wants to reiterate that this decision was made due to financial and legal counsel, and was not made lightly.

DMG owes me money, how do I get it?

We would invite any of our creditors to contact us at [email protected] for further information and to be put in contact with our trustee. We want to emphasize however that the process of bankruptcy and our current state of accounts will likely mean you will only recieve a percentage of the money owed.

How could I help DMG in this process or in the future?

Depending on the results of the Special Meeting, DMG will need a high number of volunteers to offer a significant time commitment in order to continue to operate. the issues that created the need for an insolvency trustee still remain, and it will be a long process to correct them.

I’d like to see specific information or data regarding DMG’s financial history, where can I get it?

Depending on the nature of the information you’re looking for, the Board can provide this. Naturally we’re looking to avoid conflicts around corporate security, so some information may be only accessible to our corporate partners or creditors. To inquire, we invite you to email [email protected].