Four companies within the troubled Cineworld group have received approval for their restructuring plans from a High Court judge, thereby averting the threat of administration. Cine-UK Ltd, Cineworld Cinemas Ltd, Cineworld Cinema Properties Ltd, and Cineworld Estates Ltd, which comprise the UK segment of the world’s second-largest cinema chain, faced potential administration if these plans had not been sanctioned.

Cineworld has been navigating a challenging financial landscape, culminating in plans to enter administration in July 2023 as part of a restructuring strategy aimed at addressing its substantial debt load. The company previously attempted to sell off its businesses outside the UK, US, and Ireland, but those efforts did not meet the desired valuation, leading to the decision to focus on restructuring instead

With the court’s approval, £16 million in new equity funding from the companies’ indirect parent company will be made available to address immediate financial needs, along with an additional £35 million in potential funding. This restructuring also includes renegotiating the leases for several of their 101 cinema locations, with five sites slated to close due to their “commercially unviable” status.

Mr. Justice Miles, who presided over the case, expressed in a written judgment that the court should favour the restructuring plans. He highlighted the severe financial impacts caused by the COVID-19 pandemic and recent strikes in the industry, noting that the companies are currently unprofitable.

Cineworld’s legal representation revealed that the U.S. arm of the business had already provided around $65 million to keep operations afloat until the end of June. Furthermore, the U.S. entity has committed to covering £16.7 million in rent due for the next three months as there were no alternative funding prospects.

The court also dismissed an attempt by landlords of four sites to block the lease renegotiations, despite their claims that previous agreements should prevent such actions. Although the landlords may feel disadvantaged by the restructuring, Justice Miles indicated that previous negotiations had failed to resolve the cash flow issues the companies now face.

Following the court’s ruling, Cineworld expressed satisfaction with the approval, stating it enables them to reset the business for long-term sustainability in the UK. However, five locations—Glasgow Parkhead, Bedford, Loughborough, Yate, and Swindon Regent Circus—are still confirmed to close, while Cineworld Hinckley, initially on the closure list, will remain operational.