It’s been a rough couple of years for Cineworld.
With the global pandemic decimating the bank balance, acquisitions over leveraging the company and backlashes against staff firing during the pandemic they can’t catch a break.
You can get up speed with everything that’s been going on at Cineworld here.
Now they’ve entered the courtroom as Canadian chain Cineplex seeks to claim over $2.18 billion in damages an aborted takeover deal that dates back to December 2019.
Cineworld abandoned the takeover 6 months after the deal was agreed stating that Cineplex had committed “certain breaches” of the agreed contract.
Considering the company, (the second-largest cinema operator in the world) still is facing mounting debt piles that haven’t been helped by COVID-19 shareholders will be hoping Cineplex does not succeed.
Cineworld accuses Cineplex of breaching contracts
Read more: Netflix To Acquire Cineworld?
The main issue comes down to Cineplex straying from what Cineworld states the “ordinary course” in deferring its accounts payable by 60 days and “reducing spending to a bare minimum”.
This resulted in landlords, studios and suppliers receiving 0 payments at the beginning of the outbreak of COVID-19.
Understandably Cineplex hit back and stated that this was what every other business did at the time, including Cineworld.
“Cineplex did what all other affected businesses, including Cineworld and its other peers, did,” Alan Mark, the lawyer representing Cineplex, said in the opening statements this week in Ontario.
The Canadian chain went further and stated that Cineworld never had any issue with this until they decided to cancel the takeover agreement.
Alan Mark continued stating that Cineworld was pinning on the company defaulting and going under which would have resulted in easy pickings for the chain.
What Cineworld was pinning its hopes on, was that Cineplex would eventually not be able to manage its liquidity without running afoul of the debt sealing covenant.
The court case continues in Ontario and is set to last at least a couple of weeks as these two giants go head-to-head in a battle echoing what we’ve seen on the big screen.
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