Regal Shuttering High-Profile Sherman Oaks, Union Square Theaters Amid Dozens of Closures

Royal parent company Cineworld is refusing to lease a further three dozen theatres, including some large venues, as part of its ongoing bankruptcy proceedings.

In the filing this week, the theater chain sought the right to walk away from nearly 40 outstanding leases, including at Union Square in New York City and Sherman Oaks in LA, and was granted by a bankruptcy court judge. The company is using Chapter 11 to cut costs and regain financial health by “identifying unprofitable, underperforming or otherwise undesirable theater venues in the United States.”

It noted that since the outbreak of Covid it had “taken decisive action … to ease the financial burden of underperforming cinemas – many of which are subject to off-market rental terms”. In many cases, she arranged rent deferrals, which helped a little, but are no longer sustainable.

“While such measures have given debtors some respite while the film industry recovers from the pandemic, they have not provided a comprehensive long-term solution. The Debtors’ U.S. theater portfolio is a significant contributor to their current financial challenges,” Cineworld said, noting that deferred rent increases average monthly rental obligations per theater by nearly 30% in July 2022 compared to the full year 2019.

The second-largest chain filed for bankruptcy in September in the Southern District of Texas. It has so far filed four divorce petitions to reject various leases.

Regal took over the Arclight Sherman Oaks cinema space in Sherman Oaks in 2021. The Sherman Oaks Arclight was one of the chain’s five best-selling locations.

Other rejected leases in this latest streak include Boston’s Fenway Stadium Theater and venues in Miami, Sant Fe, Las Vegas and Washington, DC See full list.