Calgary's Theatre Junction is facing a crisis as staff walk out, revenues shrivel and government withholds financial support.

"There's really no money for the next payroll," said Tonya Lailey, who resigned last week after four years at the theatre in fund development.

"Theatre Junction as we know it absolutely is on life-support," Lailey said.

"We haven't announced a season. We haven't booked artists for next year. We haven't done any preparations for the coming season."

Lailey says two key government contributions are on hold from Calgary Arts Development and the Canada Council for the Arts — organizations that have contributed several hundred thousand dollars in the past.

Elizabeth Brosseau, left, and Tonya Lailey describe a toxic work environment at the Theatre Junction Grand. Brosseau left following a work-related medical leave in 2016 and Lailey resigned July 19. (Submitted by Elizabeth Brosseau/CBC)

Theatre Junction started 12 years ago with artistic director Mark Lawes.

He launched his cutting-edge productions in the group's new home, the historic Grand Theatre. The society that runs the theatre also owns the 106-year-old building.

The theatre is now playing host to its own in-house drama as a number of current and former employees describe a toxic workplace — a culture that some of them claim the board of directors, which oversees the company, didn't fix.

Lawsuit launched

The former executive director, Guy de Carteret, was fired in May. He's since launched a lawsuit against Theatre Junction Society claiming wrongful dismissal.

CBC News has learned several employees left the company last week, leaving a skeleton staff and a technical crew with no upcoming productions.

Theatre Junction Grand is a non-profit organization, run by the Theatre Junction Society — a registered charity that receives hundreds of thousands of dollars a year from local, provincial and federal governments. Funds totalled $516,328 from all three levels of government last year alone. It also receives cash from individual and corporate donors.

The most recent filing with the Canada Revenue Agency shows the society lost more than $300,000 during the 2016-17 fiscal year — the fifth consecutive year a shortfall was recorded. The accumulated deficits since 2013 have reached $533,420.

During that same period the theatre took in $2,221,467 from the federal and provincial governments and the city-funded Calgary Arts Development.

Guy de Carteret was hired in April 2016 and signed a three-year contract as the executive director, an agreement he claims included a provision that he be paid one year's salary plus benefits in the event he was terminated without cause.

Guy de Carteret, the former executive director of Theatre Junction Grand, is suing the society that runs the theatre, claiming wrongful dismissal. (Bryan Labby/CBC, LinkedIn)

In his statement of claim filed with the Court of Queens' Bench on July 12, de Carteret says he was sacked without cause in May and Theatre Junction Society failed or refused to pay him one year's base salary.

De Carteret says he advised the society "repeatedly" during his tenure that the work environment was toxic, resulting in the departure of many former employees and the unhappiness of current employees.

"The defendant ignored the plaintiff and failed or refused to take any meaningful action," the claim states.

De Carteret also said in his claim he advised the society repeatedly during his tenure that the Theatre Junction Society's relationships within the arts community were badly damaged and could not be repaired without a drastic improvement in the society's governance and workplace culture.

The former executive director is seeking damages for breach of contract and at least $180,000 in damages, along with the restoration of his employee benefits for one year.

Theatre's response

The chair of Theatre Junction Society, Duane Hertzer, refused an interview request and instead issued a statement to CBC News.

"Theatre Junction Society board does not publicly discuss individual employee situations or perspectives. Theatre Junction Society takes all complaints of harassment seriously and has a policy on workplace culture, equity and harassment. There have been no findings of harassment. Theatre Junction is committed to ensuring that there is a positive and respectful work environment."

Hertzer did not respond to questions about the theatre's financial situation.

Elizabeth Brosseau was hired in the fall of 2014 as Theatre Junction's events and catering manager. She booked everything from awards ceremonies, to weddings to corporate events at the theatre and various meeting spaces. It was a revenue stream that brought in $440,000 between 2014 and 2016.

Theatre Junction Grand, at 608 First St. S.W., faces a financial crisis, according to former employees who recently left the 12-year-old theatre company. (Bryan Labby/CBC)

Brosseau left her position on a medical leave in the winter of 2016 and never returned. She claims the stress from her job was too much, and her work was being undermined — even sabotaged.

She was forced to cancel some of her bookings after she was told they didn't align with the artistic director's vision. Brosseau says other clients cancelled their events after she was told by Lawes to re-negotiate the terms of the original agreements.

CBC News tried to contact Lawes but received an automatic reply stating he's on vacation and to contact someone else within the organization. CBC News tried to contact that person but did not hear back.

​"It's an absolutely toxic place to work," said Brosseau, adding she is still not well enough to start looking for work again.

Tonya Lailey says many of her former colleagues were frustrated that the issues around workplace culture weren't being addressed — an environment she described as a blame-and-shame type of management style.

Lailey herself donated $10,000 to the theatre over the years. She says it's sad to see the company facing a bleak future.

"The board has communicated very little to us about what their plans might be to the point where I've lost belief that there is a plan," she said.

City to meet this week with stakeholders

After CBC News broke the story on Monday, the city said an internal meeting is planned this week.

"We'll be sitting down with all of the stakeholders to talk about exactly where they're at and how we can reach the best outcome," Coun. Evan Woolley, the city's representative on Calgary Arts Development, told CBC News.

When asked if the city would be able to recover the money, Coun. Sean Chu said he was doubtful.

"That would be nice but the grant is already provided and I doubt there's any way the city is going to make the money back," he said.

Patti Pon, the president and CEO of Calgary Arts Development, said the group wants "assurance that the deficits are not something that is a continued trend for the future."

Bryan Labby is an enterprise reporter with CBC Calgary. If you have a good story idea or tip, you can reach him at bryan.labby@cbc.ca or on Twitter at @CBCBryan.