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Law360 (May 18, 2020, 7:37 PM EDT ) Movie theater operator Cinemex Holdings USA Inc. told a Florida bankruptcy court Monday that its goal is to be able to pay August rent on the company's theater leases but it needs breathing room until then as the COVID-19 pandemic keeps theaters shuttered.
In a hearing before U.S. Bankruptcy Judge Laurel Isicoff, Cinemex's attorney Patricia Tomasco said Cinemex needs relief from its rent obligations beyond the initial 60-day period after its April 25 Chapter 11 filing date.
Even if state and local governments begin lifting stay-at-home orders and allowing Cinemex's movie theaters to reopen, there will be no movies to show until July at the earliest, Tomasco said. The next new movie will not be released until July 1, and the next one after that is set for July 17, she said.
"Without new movies, the profitable operation of these locations is not going to be feasible," Tomasco said.
But Jennifer Raviele, who represents landlords National Retail Properties LP and ShopCore Properties LP, told the court that landlords are paying "significant sums of money" to keep the debtors' assets safe during the pandemic. She suggested the parties revisit the issue before Judge Isicoff before the end of the month, to give Cinemex more time to finalize supplemental debtor-in-possession financing and to see what happens with regard to government mandates.
"We can see whether they are required to not operate or whether they choose to not operate," Raviele said, suggesting that as soon as the theaters are legally allowed to operate, they should be on the hook for their rent obligations.
The judge said she did not want the landlords to think she is unsympathetic to the losses they are facing but also cautioned that "premature opening of the movie theater could cost hundreds of thousands of dollars in cleanup costs."
Cinemex, which is jointly owned by Mexican companies Grupo Cinemex SA de CV and Operadora de Cinemas SA de CV, filed for Chapter 11 protection on April 25 and 26 citing government-mandated closures of theaters in the COVID-19 pandemic. Cinemex operates 41 upscale dine-in movie theaters in 12 states under brand name CMX Cinemas.
The company says it has laid off almost all of its 2,500 workers, leaving fewer than 20 employees to maintain the business. Its monthly lease obligations are about $3.2 million in rent, plus an additional $700,000 in tax and insurance, according to Cinemex's motion.
In an objection to Cinemex's request for rent relief, National Retail Properties and ShopCore said the relief requested "goes beyond what is allowed by the bankruptcy code" and said they want a reasonable storage fee and any common area maintenance, real estate tax and utility and insurance obligations paid.
Cinemex is represented by Brett M. Amron, Jeffrey P. Bast and Jaime Burton Leggett of Bast Amron LLP and Patricia B. Tomasco, Eric Winston and Juan P. Morillo of Quinn Emanuel Urquhart & Sullivan LLP.
National Retail Properties LP and ShopCore Properties LP are represents by Glenn D. Moses of Genovese Joblove & Battista PA and Robert L. LeHane, Jennifer D. Raviele and Sean T. Wilson of Kelley Drye & Warren LLP.
The case is In re: Cinemex USA Real Estate Holdings Inc. et al., case number 1:20-bk-14695, in the U.S. Bankruptcy Court for the Southern District of Florida.
--Editing by Abbie Sarfo.
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