Cineworld Restructuring Plan sanctioned with cross-class cram down, over objections

On 30 September 2024, Mr Justice Miles sanctioned four English Part 26A restructuring plans for Cineworld group companies, rejecting challenges from certain opposing (landlord) creditors.

At the convening hearing, the court gave permission to convene an unusually large 32 creditor meetings across the four plan companies. No creditor challenged the plans at that stage. Two classes of creditors approved each plan: an intercompany lender class and a term loan lender class. While certain of the plans were also approved by other creditor classes, 20 creditor classes across the different plans voted against them.

Two landlord creditors opposed sanction. They argued that their inclusion in the plans breached side letters entered into by certain of the plan companies in 2023. Those side letters had formed part of contractual rent negotiations and included promises by the relevant companies that, in the event of a later restructuring plan, they would not seek to make any further amendments to the relevant leases. The challenging creditors therefore sought an injunction removing their leases from the ambit of the plans.

The court dismissed the injunction application and sanctioned the plans, applying cross-class cram down. Permission to appeal was granted, so this may not be the end of the story. Below we set out the court’s reasoning, but first here are our key takeaways.

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