Cineworld companies have restructuring plans approved by High Court judge
The court in London was previously told the four companies would be likely to enter administration if the plans were not approved.
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Your support makes all the difference.Four companies which form part of troubled cinema operator Cineworld have had restructuring plans approved by a High Court judge, staving off the threat of administration.
Cine-UK Ltd, Cineworld Cinemas Ltd, Cineworld Cinema Properties Ltd and Cineworld Estates Ltd, which are parts of the UK arm of the world’s second-largest cinema chain, were at risk of entering administration if the restructuring was not approved, the court heard.
The approval means that £16 million of new equity funding from the companies’ indirect parent firm will be released to fund their immediate financial needs, with further funds of up to £35 million also to be made available.
It will also see the four companies renegotiate the leases of some of their more than 100 sites, five of which are now set to close due to being “commercially unviable”.
Mr Justice Miles approved the restructuring on Monday, stating in a written judgment that “the court should exercise its discretion in favour of sanctioning the plans”.
The court in London previously heard that the four companies, which run 101 sites and employ 4,401 staff, form part of a wider group which operates cinemas in 10 countries, including the US under the Regal Cinemas brand.
But their barrister, Tom Smith KC, told the court on Thursday that they are “presently unprofitable” after being “severely adversely impacted” by the Covid-19 pandemic and strikes by screen actors and writers last year.
Mr Smith said the US arm of the chain had provided the UK firms with around 65 million dollars to allow it to keep trading up to the end of June this year, with rent costing £19 million also paid for on the condition that the company would undergo a restructuring.
The barrister continued that the US arm had also agreed to pay £16.7 million in rent due for the three months up to the end of September as there was “no prospect of raising the money from anywhere else”.
Mr Justice Miles also dismissed a bid by the landlords of four sites, the Crown Estate and UK Commercial Property (UKCP), to get an injunction blocking the companies from renegotiating the leases of the sites.
The two bodies said that agreements last year prevented the leases from being renegotiated, with their barrister Ben Shaw KC claiming the restructuring would bring “adverse consequences”.
This will enable us to re-set the business for the long-term and ensure a sustainable future for Cineworld in the UK.
In a 31-page judgment, Mr Justice Miles said that while the landlords “may well feel aggrieved” about the restructure, the renegotiations last year “did not achieve what was needed to stave off the cashflow shortfall these companies now face” and that they “now face imminent administration, absent the plans”.
But the judge also gave UKCP the green light to appeal against his ruling, stating that the case involved “novel points of legal principle” and that there “is a realistic prospect of an appeal on them succeeding”.
Following the ruling, a Cineworld spokesperson said: “We are pleased that the court has approved our restructuring plan.
“This will enable us to re-set the business for the long-term and ensure a sustainable future for Cineworld in the UK.”