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Production of Metamorphosis was disclaimed in July, leaving producer Lauren Grant scrambling to find another broadcaster willing to pay 10 per cent of the documentary’s $935,000 budget lest she default on her agreement with the Canada Media Fund.

The Toronto International Film Festival is normally a time for celebration, one of the rare moments on the calendar when the Canadian film industry gets to grab the spotlight and talk up its successes. But as the fest kicks off next Thursday, some of the smiles on the red carpet may be a little tighter than normal, after one of the major private funders of Canadian features raised the spectre of bankruptcy over the summer, casting a cloud over an industry already struggling to adapt to a revolution in consumer viewing habits.

In May, the parent company of the national pay-television broadcaster Super Channel filed for protection from creditors, saying in court documents that competition from streaming services such as Netflix, Shomi and CraveTV, as well as other market pressures had caused a sharp drop in subscriber numbers and pushed it into insolvency.

But although consumers who are swimming in cheap and easy access to programming may shrug at the development, Canadian filmmakers argue that Super Channel's potential disappearance from the TV landscape points out what they say is the surprisingly narrow scope of viewers' actual choices, and raises hard questions about the viability of the government-designed funding model that currently underpins much of the domestic industry. It also illustrates that, despite the advent of what critics call a new golden age of documentaries, the genre remains financially fragile in Canada.

Over the past few months, producers and distributors across the country have been surprised to receive so-called "disclaim" notices sent to them by the court-appointed monitor for Super Channel's parent company, acting under the Companies' Creditors Arrangement Act, which buys time for the service to reorganize its finances. In effect, the notices unilaterally cancelled the broadcast contracts on dozens of films and halted any further payments on them.

The affected companies include the local offices of major Hollywood studios such as Warner Bros. as well as Canadian distributors eOne Films and Mongrel Media, all of which are on the hook for more than $1-million.

But many receiving the disclaim notices are independent documentary producers who lack the wherewithal to absorb even a much smaller hit. In a number of cases, their films had not yet been finished and the cancellation of the contracts set off tripwires that, because of the peculiarities of the Canadian industry, forced producers to suspend production.

"This is nothing short of catastrophic," says Vanessa Dylyn, whose feature doc The Divided Brain was about halfway through production when it was disclaimed by Super Channel in July. The move ripped open a $90,000 crater in her budget. But it also threw her plans into disarray because of a quirk of the Canadian funding system: While there are many taxpayer-supported funds that producers can tap, such as the Canada Media Fund (CMF), they require a broadcaster to first step up with a broadcast licence fee of at least 10 per cent of the total production budget.

With viewers increasingly finding material on new digital platforms and a domestic television industry characterized by intense consolidation in which critics believe a small handful of executives decide what gets made and programmed, some producers question whether traditional broadcasters should still be playing a gatekeeper role.

After years of working on Metamorphosis, a lush $935,000 documentary about the ecological response of the planet to climate change, producer Lauren Grant received a disclaim notice in July. The loss of both the broadcast licence and Super Channel's fee means she now has to scramble to find another broadcaster willing to pay 10 per cent of the budget or else she'll be in default of her agreement with the CMF; that, in turn, will preclude her getting any more of the money she is owed from the CMF to complete her postproduction.

But getting that kind of fee from another broadcaster, in a market now glutted with product, seems highly unlikely: Even before Super Channel hit the skids, producers say, money was drying up for feature-length documentaries that didn't fit snugly in a predetermined format.

Grant is hopeful the CMF will make an exception. But if not? "The absolute worst-case scenario is that the CMF says we have to make the 10-per-cent threshold, we're unable to make it and we've already spent half a million dollars on a movie that we cannot afford to finish or deliver."

"The situation with Super Channel outlines how fragile the funding system is in Canada," observes Betsy Carson, an award-winning Vancouver-based producer currently working on a sequel to the popular 2004 doc The Corporation. "There are many good things about it, but it relies on a trigger fee from a broadcaster and if anything happens to that broadcaster, and any of the contracts fall apart, then the whole house of cards comes tumbling down and the filmmakers are caught in the middle."

Some filmmakers who are working with Super Channel are unscathed for the time being, including those behind a number of high-profile docs making their world premieres at TIFF. Jamie Kastner's The Skyjacker's Tale, Fred Peabody's All Governments Lie, Nicholas de Pencier's Black Code and The River of My Dreams: A Portrait of Gordon Pinsent from Oscar-winning director Brigitte Berman (Artie Shaw: Time Is All You've Got) were all commissioned by Super Channel, and all of the filmmakers believe the channel intends to honour their contracts. But some quietly admit they are bracing for bad news: This week, the court announced it would consider a motion next Wednesday to delay a final decision from Sept. 22, 2016, when many had hoped the matter would be wrapped up, until Feb. 2, 2017. They know that, until Super Channel crawls out from under creditor protection, anything can happen.

Others, whose luck has already run out and are left wondering whether they might not be able to salvage their companies, blame their fate on what they call Super Channel's punishing contract terms. While many commissioning broadcasters pay a portion of a licence fee as soon as a contract is signed – even if delivery of the program is years away – producers who spoke to The Globe and Mail this summer noted that Super Channel's standard practice is to pay a series of instalments that starts only when a program is delivered to the network.

Montreal doc maker Tamas Wormser delivered The Wandering Muse, a celebration of Jewish musicians around the world, to Super Channel in late 2014. He received $25,000 out of a total $75,000 licence fee when the film began airing in early 2015, then another $25,000 in September, 2015. Days before the film was due to conclude its run at the end of June of this year, instead of the final $25,000 payment he was owed, he received a disclaim notice.

"For normal people, it's not much money," he admits over the phone from Montreal. "But unfortunately, for me it's one-and-a-half-year of salary. I already paid everybody else. The producer is the last to get paid." He had been intending to use the money to pay down his credit line and then use that to start preproduction on his next film, about a village of Orthodox Jews in eastern Uganda.

"I don't know how to pay it back. That affects everything. I have to fire my employees, stop preproduction on my next film, cancel my vacation with my kids. (This week, the film was nominated by the Quebec section of the Academy of Canadian Cinema & Television for a Gémeaux award, for best arts and culture documentary.)

Anne Pick, another award-winning producer, noted films usually employ dozens of crew members, who stand to lose out on future work if producers have to spend the next few years digging themselves out of debt: A recent survey looking at 31 disclaimed independent productions (out of a total of an estimated 60) found more than 1,000 people had worked on the films.

Like a number of other producers, Wormser notes ruefully that Super Channel went through a CCAA process in 2009-10, less than two years after launching in 2007 amid great hopes because it was backed by the deep-pocketed Allard family of Edmonton. "The government should have controlled them. If they had done this once before, they did not pay the content providers for their work, they should have made adjustments to make sure this didn't happen again," he says.

Dylyn suggested the Canadian Radio-television and Television Communications, which regulates the broadcast industry, should have practised stronger oversight.

In a statement, a CRTC spokesperson rejected the notion. "The commission does not get involved in commercial agreements between licensees and their suppliers," said Patricia Valladao, adding the commission had reduced Super Channel's Canadian content commitments in acknowledgment of the company's financial difficulties.

Yet, even producers who have been burned by the CCAA process want to see Super Channel return to form. Wormser notes that his arts and culture documentaries used to find a welcome home on Bravo Canada. (The channel now airs U.S. cop shows and 20-year-old Hollywood movies.)

Super Channel "has been extremely open to showcasing the type of films I want to make," says Montreal producer Amy Miller, who specializes in documentaries that "have a very anti-capitalist, anti-colonialist feel to them." Her latest film, Tomorrow's Power, which was shot in Gaza, Germany and Colombia, doesn't hold the hands of Western viewers: It is not in English, and has no narration. But it was disclaimed in July and now, she says, "I'm not confident there's a home in the Canadian landscape for its broadcast."

"It's tough to make a living in the feature-documentary business," notes Stuart Coxe, whose documentary on the Guess Who, Wheatfield Soul, was disclaimed. "I've talked to broadcast executives who've made it quite clear that the independent feature doc is a hobby business. That's the way they view it. It's like poetry, almost – it's an art form that one does for its own sake."

He adds: "As an art form, it's extremely vibrant. And people are still getting the films done. They're just getting the films done at really low price points. Which means there are certain stories you just can't do."