Cineworld Sees Bankruptcy Court Award Immediate US$785 Million ‘First Day’ Relief
British cinema chain Cineworld Group gets its ‘first day’ relief in the hopes to satisfy the firm’s creditors–up to approximately US$785 million.
The theatre chain announced on Friday that the United States Bankruptcy Court for the Southern District of Texas has awarded the firm an immediate access to the relief amount, a slice of approximately US$1.94 billion debtor-in-possession financing facility. Together with its current cash balances, the firm is expected “to meet its ongoing obligations, including post-petition obligations to vendors and suppliers, as well as employee wages, salaries and benefits programs.”
“Today’s approval of our requested ‘first day’ relief is a positive step forward for the Group and our restructuring efforts,” said CEO Mooky Greidinger. “As we position Cineworld for long-term growth, through this Chapter 11 process and beyond, we remain steadfast in our commitment to providing our guests with the most memorable moviegoing experiences and maintaining our long-standing relationships with our business partners.”
The company recently filed a Chapter 11 bankruptcy process in UK and in US after months of ruminating rescue talks to improve its liquidity and address growing net debt.
It is quite unclear, however, if part of the relief amount will be used by the firm to partly satisfy the pending US$1.24 billion court award due to Canadian theatre chain Cineplex Inc. (TSX: CGX). Earlier, the latter admits that the judgement “is initially stayed pursuant” to the bankruptcy proceedings.
“While the judgment and next steps are a key focus for Cineplex and its advisors, due to uncertainties inherent in appeals as well as the newly commenced Cineworld bankruptcy proceedings, it is not possible for Cineplex to predict the timing or final outcome of the appeal of the decision,” the Canadian chain said in a statement.
The court judgment is still being appealed by Cineworld, answered by a cross appeal by Cineplex. Both appeals will be heard by the court on October 12-13, 2022. However, Cineplex isn’t optimistic that the full award will be satisfied by the British chain.
“[Even] if Cineworld’s appeal is not successful, Cineworld may not have the ability to satisfy the full amount of any damages or costs awarded by the Court,” the firm added.
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