CMX Files Chapter 11, Asks Studios, Landlords For “Industry Rebalancing”
Cinemex Holdings USA, Inc. and Cinemex USA Real Estate Holdings, Inc. have filed for bankruptcy protection and reorganization under Chapter 11 of the US Bankruptcy Code in Miami, Florida, where it is based.
However, the deal fell through, with Cinemex allegedly reneging at the last-minute, citing issues arising from the pandemic and subsequent closures. Star Cinema owner Omar Khan filed a suit April 2 in the US District Court for Southern District of Texas.
CMX issued a statement today saying it was declaring Chapter 11.
“We did so as a result of the economic crisis precipitated by the coronavirus pandemic,” the statement said. “This filing will help ensure the long-term viability of our business, including our ability to protect our employees. We are in a state of complete uncertainty as to when we can re-open our theaters and when our customers will feel safe and secure in returning to them given that there is presently no vaccine against the virus. We cannot forecast when — if ever — customer numbers will return to pre-crisis levels.”
CMX said the pandemic “has resulted in the total suspension of our business. We are not generating any revenues while having to pay high fixed costs. Even prior to filing for bankruptcy, we were spending over 30 percent of our revenues on lease-related expenses while studios ended up with 60 percent of every ticket sold. We tried in good faith to negotiate with our creditors — who notwithstanding the crisis were seeking full payment and filing liens — to no avail.”
The exhibitor said that “the studios, landlords and theater companies must take this as an opportunity to place the industry on a sound, long-term financial footing. To do so, there needs to be a rebalancing of the current economic arrangements, which disproportionately benefit the studios and landlords at the expense of the theater companies. The industry will not survive absent such an economic rebalancing. The studios will continue to need the revenues and publicity generated by theater companies notwithstanding digital distribution, and mall landlords will become even more reliant on movie theaters as retailers continue to migrate to the internet.”
CMX added that it opened restaurants and bars to help with revenue, but it did not help make up its claimed revenue shortfall.
“A viable rebalancing would result in (1) studios getting a maximum of 40 percent of theater companies’ revenues; and (2) mall landlords providing the same terms to movie theaters that they currently provide to anchor tenants such as department stores. Movie theaters are increasingly the anchor tenants and landlords should treat them as such. With the industry’s support, the aim is to restructure our company while protecting our employees and to emerge in a strong and viable long-term financial condition to continue to serve our loyal customers.”