Sparks fly on the Cineworld rescue, but the judge says, “I won’t sleep until we pay those employees”; The failed chain has only $ 4 million in cash on hand

A federal judge sent in a proposed $ 1.9 billion funding package for bankrupt Cineworld for reconsideration, but said he was ready to quickly approve some sort of cash injection for Regal Cinemas.

Cineworld filed for Chapter 11 yesterday in the Southern District of Texas with the so-called DIP loan, or borrower in possession, from a consortium of creditors to continue operating while it cleans up its balance sheet. But Judge Marvin Isgur set aside $ 1 billion of that amount not for operations, but to refinance advance loans from the same group of borrowers.

At today’s hearing, Cineworld lawyers and most of DIP’s creditors were stunned when the judge dismissed the case, highlighting Cineworld’s plight with only $ 4 million in cash on hand. It’s not enough to support global operations, said James Mesterharm of AlixPartners, director of restructuring at Cineworld, hired in August to review its books, which led to yesterday’s filing for bankruptcy.

Without the DIP loan, the chain would be forced to “suspend operations, to the detriment of all stakeholders,” he said.

The judge offered several options, suggesting that the DIP group set aside $ 1 billion until they, or other creditors, meet Cineworld’s immediate cash demands for the first time by holding hundreds of millions to keep the lights on. , he has declared. I would sign immediately. “I won’t sleep until we pay these employees tonight,” she said.

The judge also offered a guaranteed high yield of more than 20% to lenders willing to collect Cineworld.

“I’m trying to be flexible, the only goal is for the billion dollars to be delayed until I give people the opportunity to do so.” Credit committees will be set up with their own financial advisors, she said, as is common in bankruptcies, and “could offer an alternative.”

“This case started 26 hours ago and today I will not decide on the outcome of the case.

Michael Messersmith, a lawyer representing 52% of DIP lenders, said he would do his best, but “our group does not control 100% of the priority terms of the loans.” This “causes me a bit of anxiety. But we are creative lawyers, so I hope we can overcome this anxiety. We will work very hard to get there. “

“We need money tomorrow. The only party that will provide this are the existing creditors. Nobody is on loan, “said Christopher Marcus of Kirkland Ellis, a Cineworld attorney.

Isgur sent everyone to renegotiate and asked them to come back in the afternoon with a new proposal.

The audience began with a presentation on the history of Cineworld as a family business that was started by CEO Muki Greidinger’s grandfather in a single cinema in Israel and has grown to become the international giant par excellence. It was paying off its debt and generally thriving, Kirkland & Ellis said, until it collapsed due to Covid theaters closing, low attendance, and a whimsical studio release schedule. Canadian Cineplex has filed an appeal against a $ 1.24 billion sentence, with a hearing set for October. The influx of adopters earlier this year was promising, but the tents dried up at the end of the summer and the chain entered Chapter 11.

The hearing also included questions from owners’ representatives about the terms of the DIP. Cineworld has more than 500 leases in the United States and pays about $ 60 million every month. In September, he lost most of his rents.

Hollywood studios and other providers are among Cineworld’s largest unsecured creditors in its Chapter 11 filing.

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