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Law360 (November 24, 2020, 8:17 PM EST) -- A Florida bankruptcy judge on Tuesday signed off on the Chapter 11 reorganization plan for movie theater operator Cinemex Holdings USA Inc. that its attorneys say will allow it to jettison about $200 million in debt and return as a leaner and more competitive business.
In a Zoom hearing, U.S. Bankruptcy Judge Laurel M. Isicoff confirmed the bankruptcy exit plan, which is expected to provide up to $60 million to the estate to pay various creditors and for administrative expenses.
General unsecured creditors, which include rejected landlords, vendors and operational creditors, will receive $5.5 million, or about 13 cents on the dollar, according to the plan.
The judge confirmed the plan over the objection of MN Theaters 2006 LLC, which owns two Minnesota movie theaters and claims the plan helps Grupo Cinemex continue to evade an order from a New York federal court where it has a $56 million case against Grupo Cinemex. The New York court has required that Grupo Cinemex deliver to the U.S. Marshal enough property to secure the $56 million claim and maintain the status quo in the case, but Grupo Cinemex has told the court that Mexican law prohibits anyone from transferring property in Mexico to the U.S. to comply with a U.S. court order.
At the hearing Tuesday, MN Theaters' attorney Peter Siddiqui of Katten Muchin Rosenman LLP told the bankruptcy court that Wine & Roses SA de CV, the affiliate of Grupo Cinemex that is buying Cinemex Holdings USA as part of the confirmation plan, should not be included in a release that could potentially extinguish his client's claims.
Siddiqui said Wine & Roses "exists solely to buy these assets," is not a fiduciary and therefore should not be included in a third-party release.
Judge Isicoff told Siddiqui that she would not create a specific carve-out in the release for MN Theaters' claims but said she will retain jurisdiction in the case and he could return to her courtroom to make his case at a later time.
"You can come back to this court and make the argument why you believe that claim is not covered," the judge said.
The judge also signed off on requests for about $5.5 million in attorney fees and expenses for the debtors' attorneys at Quinn Emanuel Urquhart & Sullivan LLP and Bast Amron LLP.
Cinemex, which is jointly owned by Mexican companies Grupo Cinemex and Operadora de Cinemas SA de CV, filed for Chapter 11 protection in April, citing government-mandated closures of theaters during the COVID-19 pandemic. Cinemex operated 41 upscale dine-in movie theaters in 12 U.S. states under the CMX Cinemas brand.
The company previously said it has laid off almost all of its 2,500 workers, leaving fewer than 20 employees to maintain the business. At the time of its bankruptcy filing, its monthly lease obligations were about $3.2 million in rent, plus an additional $700,000 in tax and insurance, according to case filings. The debtors hit Chapter 11 listing more than $100 million in debt.
During the bankruptcy, Cinemex has engaged in efforts to determine which of its theaters are or can be profitable, renegotiate leases with landlords and a revenue-sharing agreement with studios, according to its disclosure statement filed last month. The reorganized company expects to keep 32 of its 41 prepetition locations.
The debtors are represented by Patricia B. Tomasco and Juan P. Morillo of Quinn Emanuel Urquhart & Sullivan LLP and Jeffrey P. Bast and Brett M. Amron of Bast Amron LLP.
The committee is represented by Robert J. Feinstein of Paculski Stang Ziehl & Jones and Paul Singerman of Berger Singerman LLP.
MN Theaters is represented by David L. Gay of Carlton Fields PA and Peter A. Siddiqui of Katten Muchin Rosenman LLP.
The case is In re: Cinemex USA Real Estate Holdings Inc. et al., case number 1:20-bk-14695, in the U.S. Bankruptcy Court for the Southern District of Florida.
--Additional reporting by Rose Krebs. Editing by Stephen Berg.
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