By Matthew Perlman

Law360 (August 31, 2020, 5:36 PM EDT) -- A D.C. federal judge has given AMC Entertainment Holdings Inc. the green light to repurchase several theaters it shed in a deal with the Justice Department for clearance of its $1.2 billion Carmike Cinemas acquisition after the COVID-19 pandemic forced the buyer into liquidation.

U.S. District Judge Randolph D. Moss issued a brief order granting AMC's request Friday, a day after the theater chain filed an unopposed motion seeking to modify a settlement agreement it struck with government enforcers in 2016 over the Carmike deal.

The order noted that AMC's motion contended that the Tunney Act does not require a public comment period when a U.S. Department of Justice merger settlement is altered, only when it is entered. But it is not necessary to address the issue because further input from the public is not required given "the unique, exigent circumstances of this case," the order said.

"First, the COVID-19 pandemic has caused extreme economic hardship in the movie theater industry, and the proposed amendments are necessary to ameliorate additional harm to the industry," the text order said. "Second, the scope of the proposed amendments is narrowly circumscribed."

AMC filed its unopposed motion on Thursday seeking to modify the final judgment entered by the court to allow the reacquisition of 10 theaters it sold to New Vision Cinemas LLC as part of its settlement with the DOJ to allay concerns raised by its purchase of Carmike.

New Vision was created by the private equity firm Beekman Group to buy 16 locations from AMC in 2017, according to a statement from the time. AMC said in its motion that it had to retain some financial obligations for leases at 10 of the theaters, where landlords either refused to release it from liability or where it had to guarantee the lease obligations in the event New Vision defaulted.

The theater chain said New Vision started an assignment for the benefit of creditors in Georgia in early July that will result in the liquidation of its assets, and that several landlords had already claimed New Vision is in default and are seeking to collect from AMC. The additional burden from these defaults, the motion said, strains AMC's "ability to manage the short- and long-term viability of its business and the communities it serves."

In addition to acknowledging the devastating impact the COVID-19 pandemic has had on the theater industry, Friday's order also said the requested changes to the settlement are sufficiently narrow, since AMC is only looking for the ability to acquire theaters that New Vision has abandoned and where it remains financially liable for defaults.

"And even then, reacquisitions will be subject to government approval," the order said.

AMC reached a deal with the DOJ in December 2016 allowing its purchase of Carmike to proceed with the sale of theaters in 15 markets where the companies overlapped. AMC also agreed to shed the majority of its interest in preshow services company National Cinemedia LLC to head off a potential loss in competition for cinema advertising.

The acquisition added Carmike's nearly 3,000 screens — located predominantly in midsize markets outside large cities — to AMC's stable of around 5,300 screens, creating a theater chain with a presence in more than 600 locations spanning 45 states and the District of Columbia.

At the end of last year, AMC had 636 theaters in the U.S. and 368 internationally, according to its annual report.

Representatives for AMC, Beekman and the DOJ did not immediately respond to requests for comment Monday.

AMC is represented by Michael B. Bernstein and Justin P. Hedge of Arnold & Porter.

Additional counsel information was not immediately available.

The case is U.S. v. AMC Entertainment Holdings Inc. et al., case number 1:16-cv-02475, in the U.S. District Court for the District of Columbia.

--Additional reporting by Y. Peter Kang. Editing by Daniel King.

For a reprint of this article, please contact reprints@law360.com.