Cineworld Creditors Approve Restructuring Plan Amid Landlord Opposition A significant milestone has been reached in the restructuring of Cineworld, a
Cineworld Creditors Approve Restructuring Plan Amid Landlord Opposition
A significant milestone has been reached in the restructuring of Cineworld, a debt-ridden cinema chain, as creditors have approved the aggressive plan to address the company’s financial woes. The decision was made during a "Plan Meeting" held on September 18.
The Road Ahead
The next step is a "Sanction Hearing" in London on Thursday, September 26, where a judge will rule on whether creditors will be better off under the plan than they would be if the company were to enter insolvency. This process is being pursued under 26A of the Companies Act.
Challenges Ahead
The plan has faced opposition from several of Cineworld’s major landlords, including British Land, Landsec, and Legal & General, who voted against the restructuring. However, the "intercompany lender" and the "loan company lender" voted overwhelmingly in favor of the plan.
Experts Weigh In
A property expert told Screen that the plan was designed to crush the votes of the landlords, as the largest class of creditors are the lenders, who are also the equity holders. "Because [the lenders] have one foot in the shareholder bucket and one foot in the lender bucket, that gives them control over this process," the expert said.
Goldentree’s Involvement
Goldentree, a Wall Street hedge fund that owns the Travelodge chain, has been widely reported as one of the funds leading the contentious restructure. The expert described the situation as "one big poker game" and stated that hedge funds love playing this kind of game.
Local Councils and Other Landlords
Several local councils, including Barnsley, Solihull, and South Oxfordshire, were also included among the landlords who opposed the plan. If the plan is implemented, these landlords may now terminate their leases and look to work with other operators.
Consequences of Failure
If the restructuring plan is not successfully implemented, Cineworld is expected to experience a "shortfall in liquidity" when the quarterly rent payment falls due. This could lead to further financial difficulties for the company.
Conclusion
The approval of the restructuring plan marks a significant step forward for Cineworld, but the road ahead will be challenging. The company’s landlords, including several local councils, have opposed the plan, and it remains to be seen how this will impact the future of the cinema chain.
Frequently Asked Questions
Q: What is the purpose of the restructuring plan?
A: The plan is designed to address Cineworld’s financial woes and ensure the company’s future viability.
Q: Who voted against the plan?
A: Several of Cineworld’s major landlords, including British Land, Landsec, and Legal & General, voted against the plan.
Q: Who voted in favor of the plan?
A: The "intercompany lender" and the "loan company lender" voted overwhelmingly in favor of the plan.
Q: What are the consequences of failure?
A: If the plan is not successfully implemented, Cineworld is expected to experience a "shortfall in liquidity" when the quarterly rent payment falls due.
COMMENTS