High Court move over Cineworld restructure plan

Four companies within the struggling cinema chain Cineworld are seeking approval from the High Court for a restructuring plan to ensure their continued operation. Cine-UK Ltd, Cineworld Cinemas Ltd, Cineworld Cinema Properties Ltd, and Cineworld Estates Ltd, all part of the UK division of the world’s second-largest cinema chain, are currently unprofitable, the court heard on Thursday.

Lawyers representing the companiesaid that Cineworld's US division has agreed to provide financial support, contingent upon the approval of the restructuring plan. Without approval, the companies face the possibility of administration. The proposal includes renegotiating leases for over 100 sites across the UK, particularly those that are not economically viable, and the closure of six cinemas deemed commercially unsustainable.

However, landlords of four sites, including the Crown Estate and UK Commercial Property (UKCP), are seeking an injunction to prevent changes to their rental agreements. They argue that agreements made last year prohibit any further alterations through restructuring.

Tom Smith KC, representing the Cineworld companies, warned that if the plans are not approved, the companies would be unable to meet their financial obligations to creditors and would likely file for administration. Currently, Cineworld operates 101 cinemas in the UK under its own brand, as well as two Picturehouse cinemas. The wider group employs 4,401 staff and runs cinemas in 10 countries.

The company has struggled financially since being heavily impacted by the Covid pandemic, as well as strikes by actors and writers. Despite restructuring its US operations last year, Cineworld’s UK arm remains burdened by high rental costs, with many leases exceeding market value.

The company plans to close six sites but will keep all locations operational until the restructuring plans are finalized. If approved, £16 million of new equity funding from its parent firm will be released, with further funds of up to £35 million available. A judgment on the case will be delivered at a later date.