Law360 is providing free access to its coronavirus coverage to make sure all members of the legal community have accurate information in this time of uncertainty and change. Use the form below to sign up for any of our weekly newsletters. Signing up for any of our section newsletters will opt you in to the weekly Coronavirus briefing.
Sign up for our Bankruptcy newsletter
You must correct or enter the following before you can sign up:
Thank You!
Law360 (August 28, 2020, 7:06 PM EDT ) AMC Entertainment Holdings Inc. has told a D.C. district court that it wants to repurchase several theaters it shed as a condition of Justice Department approval for its $1.2 billion acquisition of Carmike Cinemas in 2016, saying the buyer has gone into liquidation.
AMC filed an unopposed motion on Thursday seeking to modify the final judgment to allow the re-acquisition of 10 theaters it sold to New Vision Cinemas LLC as a part of a settlement with the U.S. Department of Justice to allay concerns raised by a deal the agency said created the nation's largest cinema chain.
The company said in its motion that the COVID-19 pandemic had put "unprecedented pressure on the theatrical exhibition industry," noting the suspension of AMC's U.S. operation in March and the furloughing of its headquarters staff. New Vision was similarly forced to shut its doors earlier this year, and the motion said the upheaval ultimately led to it entering liquidation proceedings last month.
"The degree of economic hardship currently being experienced by AMC, New Vision, and the entire theatre exhibition industry is a unique changed circumstance that could not have been anticipated at the time the final judgment was entered," the motion said.
New Vision was created by the private equity firm Beekman Group to buy 16 locations from AMC in 2017, according to a statement from the time. Thursday's motion said that AMC had to retain some financial obligations for leases at 10 of the theaters, where landlords either refused to release it from liability or where it had to guarantee the lease obligations in the event New Vision defaulted.
AMC said that New Vision started an assignment for the benefit of creditors in Georgia in early July that will result in the liquidation of its assets, and that several landlords had already claimed New Vision is in default and are seeking to collect from AMC.
"The additional significant financial burden resulting from New Vision defaulting on its obligations will put additional financial strain on AMC's ability to manage the short- and long-term viability of its business and the communities it serves," the motion said.
Instead, AMC is asking the court to allow it to negotiate new lease agreements with the landlords and to operate theaters at some of the locations where New Vision has defaulted. The motion argued that it would be in the public interest for AMC to take over the theaters, since New Vision won't be able to run them.
"It would benefit consumers by ensuring theatrical exhibition continues at these locations; it would provide important revenue to the landlords of these properties to help offset their financial obligations arising from New Vision's default; and it would provide important revenue that will help the affected landlords manage the economic hardship caused by the COVID-19 pandemic," the motion said.
Representatives for the DOJ did not respond to a request for comment about AMC's effort on Friday, but the motion said it was not being opposed.
AMC reached a deal with the DOJ in December 2016 allowing its purchase of Carmike to proceed with the sale of theaters in 15 markets where the companies overlapped. AMC also agreed to shed the majority of its interest in pre-show services company National Cinemedia LLC to head off a potential loss in competition for cinema advertising.
The acquisition added Carmike's nearly 3,000 screens — located largely in midsize markets outside large cities — to AMC's stable of around 5,300 screens, creating a theater chain with a presence in more than 600 locations spanning 45 states and the District of Columbia.
At the end of last year, AMC had 636 theaters in the U.S. and 368 internationally, according to its annual report.
The company noted in Thursday's motion that its revenue in the fourth quarter of 2019 was $1.4 billion but that it has since "declined to virtually zero." AMC reopened 100 or so locations in mid-August and has plans to have around 400 operating by early September, according to recent company statements.
Representatives for AMC and Beekman did not respond to requests for comment Friday.
AMC is represented by Michael B. Bernstein and Justin P. Hedge of Arnold & Porter Kaye Scholer LLP
Additional counsel information was not immediately available Friday.
The case is U.S. v. AMC Entertainment Holdings Inc. et al, case number 1:16-cv-02475, in the U.S. District Court for the District of Columbia.
--Additional reporting by Y. Peter Kang. Editing by Peter Rozovsky.
For a reprint of this article, please contact reprints@law360.com.
