Cinema chain Cineworld faces a make or break week as it awaits a crunch High Court verdict on whether it can begin negotiations over a radical restructuring of its UK business.
Under proposals to be put before a judge on Wednesday, six of Cineworld’s multiplexes would move to a “zero rent” agreement. A further ten would switch to turnover rents, receiving about 50p for every ticket sold. And rents at 33 other sites would be cut to “market levels” as deemed by Cineworld’s own advisers.
The Times reports that the restructuring is being proposed under a new arrangement in which at least three-quarters of just one class of creditors can agree to the deal and “cram down” other classes. Cineworld has split its creditors into more than 30 different classes.
The last resort for landlords would typically be to take back their properties instead of agreeing to a restructuring.
However, Cineworld has the right to remove fixtures and fittings — including projectors, audio systems and seating — before they do so, making it difficult for landlords to quickly install their own operators to run the cinemas on their behalf.
A spokeswoman for Cineworld said: “In the event that a landlord chooses to take their property back, Cineworld will, of course, remove its own furniture, fittings and equipment.”
The legal hearing this week is the first step in the restructuring process. Talks with each group of landlords will follow before a creditor vote in September.