MONTREAL -- The major upheavals in the Canuck film distribution biz just keep coming. Now two of the country's top distribs are facing some major problems.

Alliance Films, Canada's leading film distributor, is set to lose its most lucrative output deal as a result of Warner Bros.' slashing of New Line.

Montreal's Christal Films is in even more serious difficulty; the company run by seasoned industry player Christian Larouche is facing a liquidity crisis and must find a new financial partner.

These problems come on the heels of the emergence of two major new companies poised to battle for market-share with Alliance. Entertainment One, which is publicly-traded in the U.K. but has its head office in Toronto, bought Montreal distributor Seville Pictures and is aggressively expanding Seville's presence in Canada. Also last year, veteran industryite Robert Lantos founded Maximum Films to distribute pics in Canada and internationally.

Earlier this month, Entertainment One and Maximum announced they were pooling their resources to work together in Canada, while remaining separate companies.

Alliance makes its money from its deals with U.S. minimajors like Miramax, Focus and New Line, with New Line reportedly providing some 15% of Alliance's annual box office revenue in Canada. Alliance has a deal with New Line until the end of the year, so it will continue to handle the studio's slate for the rest of 2008, even though those pics will be going out via Warner Bros. in the U.S.

But after this year, Alliance will be losing the revenue generated by New Line, which gave Alliance many of its biggest hits in recent years, including the "Lord of the Rings," "Austin Powers" and "Rush Hour" pics.

This is not good news for the Societe Generale de Financement, the Quebec government's investment arm, which paid C$100 million ($98.5 million) in mid-January to acquire 51% of the voting shares of Alliance and a 38.5% ownership stake. The government investment group would not comment on the loss of the New Line films. The rest of the equity in the company is owned by Goldman Sachs.

Alliance CEO Victor Loewy says his company will be inking a new output deal with another international film company shortly, but would not provide further details. He insists Alliance had not been making money from New Line pics in the past year or two, citing "The Golden Compass" as a New Line pic that bombed for Alliance.

But Loewy admits he was thrown for a loop by the news late last month that New Line was virtually disappearing.

"I was in shock, because I happen to be close a personal friend of (Bob Shaye and Michael Lynne)," Loewy says. "We've been working together since the days of the New York Erotic Film Festival. So it's a terrible thing for me personally."

Loewy also isn't pleased by the arrival of new competitors Entertainment One and Maximum.

"It will definitely bring the prices up, and it'll make it more unpleasant for us," Loewy says.

Christal meanwhile is facing a cash crunch related to its expansion into the rest of Canada from its Quebec base. Problematically, the Montreal-based company last year ended its deal with Maple Pictures, which provided Christal with a slate of films, including all Lionsgate product.

Christal has pinkslipped 10 staffers, departures directly related to the drop in volume of releases now that Lionsgate pics are no longer going out in Quebec via Christal. (Seville has taken over the distribution of Maple Picture pics in Quebec.)

Adding to its woes, Christal is in dispute with Technicolor over moneys owed for the processing of film stock.

Seville co-president David Reckziegel suggests that tremors in the Canadian distribution biz are ongoing.

"There are significant changes, shifting of market-share, and I don't think it's over," Reckziegel says. "But Canada remains a good market for filmed entertainment."