Cineplex Inc. (TSX: CGX) relayed on Wednesday that the United States Bankruptcy Court for the Southern District of Texas declined the firm’s request to claim the court judgment already awarded, related to the breach of contract case with British cinema chain Cineworld Group.
The Canadian theatre chain has a pending court award of US$1.24 billion in damages after the firm won in the Ontario Court against Cineworld. The latter claimed Cineplex breached their contract and thus unilaterally terminated the agreement. However, the court didn’t agree and handed the judgment down in favor of Cineplex.
However, with Cineworld’s bankruptcy filing, the claim “is initially stayed pursuant” to the proceedings, with Cineplex admitting that it is not possible “to predict the timing or final outcome of the appeal of the decision.”
Despite this, Cineplex still asked the bankruptcy court to modify the automatic stay hedged on the award and to be allowed to proceed with the claim in the Ontario court. However, the court did not grant the request, “without prejudice to Cineplex’s ability to seek such relief at a later date.”
The Ontario 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.
Nevertheless, the Canadian theatre chain said it also “remains confident in the recovery of its businesses.”
Cineplex last traded at $8.95 on the TSX.
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