Felix & Paul Studios files for bankruptcy with $34.5 million of liabilities

Felix & Paul Studios Inc., the Montreal virtual-reality studio behind Space Explorers: The ISS Experience, made an assignment in bankruptcy on September 10. Deloitte Restructuring was appointed trustee, and the first creditors' meeting is set for September 28.

What the studio does

Virtual reality puts a headset on the viewer and surrounds them with a film or a game world. Felix & Paul makes the cinematic kind. Directors Félix Lajeunesse and Paul Raphaël and producer Stéphane Rituit founded it in 2013, and it has won two Primetime Emmys and a Daytime Emmy. It built most of its own filming equipment and did early work for Samsung, Fox Searchlight, Universal and Cirque du Soleil. Its Space Explorers series, filmed aboard the International Space Station with TIME Studios and NASA, is described as the largest production ever shot in space.

The studio sold that content in several ways. According to court filings, revenue came from location-based VR shows, distribution deals with Meta for headsets at home, and the dome and planetarium market. Space Explorers: The Infinite, a joint venture with PHI Studio distributed by Infinity Experiences, lets up to 150 visitors at a time roam a life-size version of the station. It has drawn some 500,000 visitors, and a Mississauga stop this spring priced tickets at about $18 to $29 (Canadian).

Its biggest bet was Interstellar Arc. The studio owns the one-hour walk-through attraction at Area15 in Las Vegas, which opened in October 2025 and takes up to 170 guests an hour in Meta Quest headsets after three years of development. Guests see a spaceship in VR but can touch the real railings that match it.

The numbers

As of July 31, the company had approximately US$34.5 million of liabilities, including US$22.2 million of secured claims, against assets with a book value of about US$22.1 million. The secured creditors are Export Development Canada (about US$6.3 million), Investissement Québec (US$5.8 million), National Bank of Canada, BDC Capital, Canada Economic Development and SODEC. Net losses totalled about US$19.2 million over its three most recent reporting periods.

What went wrong

Management blamed accumulated losses in the production business and weaker-than-expected revenue from Interstellar Arc. Delays to two lunar missions it works on added costs and pushed out expected revenue. The cancellation of a major project in June then hurt its ability to raise financing.

Sale process and plan

A sale and investment process launched in July reached 76 potential buyers and investors, and 51 signed NDAs. No binding bid arrived by the July 28 deadline. The one non-binding proposal offered creditors no cash and was withdrawn August 9 because of the liquidity needed to restart the business. The studio ceased commercial operations in mid-August and laid off nearly its entire workforce.

Deloitte is now asking the Quebec Superior Court to approve a US$350,000 sale of the Space Explorers franchise and the lunar-camera technology to 18201714 Canada Inc., a new company backed by former shareholders and employees. The trustee says the price beats forced liquidation, and the assets are time-sensitive. The camera systems are being integrated into Astrobotic and Intuitive Machines missions launching in November and December, and five specialized engineers hold the know-how.

Proceeds would cover transaction-related professional fees and give secured creditors only a marginal recovery. Unsecured creditors would get nothing. Closing was expected around September 21.

Miller Thomson acts for the trustee. Osler, Hoskin & Harcourt reviewed the validity and enforceability of the lenders' security.