Cineworld fights for survival: Restructuring plans in court

Cineworld, the world's second-largest cinema operator, is fighting for its survival in the United Kingdom. Four subsidiaries are currently seeking approval from the High Court for a comprehensive restructuring plan to continue their operations. These plans are necessary as the affected companies are currently unprofitable. The US branch of the company has pledged financial support to the British firms, contingent on the restructuring. Without it, administration looms. As part of the proposals, lease agreements for some of the more than 100 locations in the UK are to be renegotiated, and six unprofitable cinemas will be closed. However, the plans face opposition from the landlords of some locations, including the Crown Estate and UK Commercial Property. They are seeking an injunction against the changes to the lease agreements, claiming agreements from the previous year prevent such changes. Cineworld's lawyers argue that without the approval of the plans, the companies will not have enough funds to meet their payment obligations to creditors. Insolvency is threatened. The company's UK subsidiary currently operates 101 cinemas under the Cineworld name and two under the Picturehouse name. In total, the group employs 4,401 staff and operates across ten countries, including the USA, where it operates under the Regal Cinemas brand. Cineworld's difficulties have been exacerbated by the Covid-19 pandemic and related restrictions, as well as strikes by actors and screenwriters. Rental costs at many locations exceed the market value of the properties, exacerbating financial problems. In July, it was announced that six locations in Glasgow, Bedford, Hinckley, Loughborough, Yate, and Swindon would be closed due to lack of profitability. However, these cinemas remain open pending the approval of the restructuring plans. To date, the US subsidiary has provided around $65 million to the British firms to sustain operations until the end of June. Rental costs amounting to £19 million were also paid, on the condition that restructuring occurs. Additionally, rent for the three months to the end of September, totaling £16.7 million, was covered as no other funding sources were available. Should the restructuring plans be approved, capital of £16 million will be provided by the parent company, with further funds up to £35 million potentially made available. The final decision of the court will be announced by Mr Justice Miles at a later date.