Cineworld Restructuring Plans Approved
Leases of objecting landlords included in the plans despite a promise to exclude their leases from the insolvency procedure.
(High Court) Re Cine-UK Ltd and others [2024] EWHC 2475 (Ch) [2024]
The High Court approved restructuring plans under Part 26A of the Companies Act 2006. The approval of the restructuring plans was not a surprise. However, more significant was the dismissal of injunctions filed by UK Commercial Property Finance Holdings Ltd (“UKCP”) and the Crown Estate to order the removal of their leases from the plans.
UKCP and the Crown Estate were landlords under Cineworld leases. Lease renegotiations took place prior to the restructuring plan. Cineworld gave undertakings not to seek any further amendments of the lease terms in the event of a subsequent restructuring plan. Cineworld also agreed that if a restructuring plan was proposed, they would not include the UKCP and Crown Estate leases.
However, Cineworld’s financial woes worsened, and they applied for restructuring plans that included the UKCP and Crown Estate leases and imposed further detrimental terms.
The judge approved the plans, dismissed the injunction applications and refused to exclude UKCP and the Crown Estate from the plans on the basis that:
- the plans could reverse settlements reached before the introduction of the plans;
- UKCP and the Crown Estate were therefore in the same position as other landlords in the same class within the plans; and
- UKCP and the Crown Estate had to be treated in the same way as the other landlords.
Further to the decision, it is likely that landlords will be wary of assuming that an agreement by a tenant to exclude a lease from future insolvency plans will hold any weight. However, once a restructuring plan is proposed there is sometimes scope for parties to reach a settlement.
UKCP has been given permission to appeal.
Posted on 11/04/2024 by Ortolan
