Listen To This Post
In addition to our normal news coverage, What Now Atlanta is tracking ways Atlanta’s businesses are adapting to the novel coronavirus and the challenges it brings to brick-and-mortars.
Cinemex Holdings USA, Inc. and Cinemex USA Real Estate Holdings, Inc. on Saturday filed for bankruptcy protection and reorganization under Chapter 11 of the U.S. Bankruptcy Code in Miami, Florida, where the company is based.
The companies own and operate several CMX Cinemas, CinéBistro, and Cobb Theatres in Georgia, including in Alpharetta and Brookhaven.
The move was a result of “the economic crisis precipitated by the coronavirus pandemic,” a company spoke upon in an email told What Now Atlanta.
Here’s the rest of the companies’ statement on the filing:
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.
This unprecedented crisis 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 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.
We resorted to opening restaurants and bars in our theaters to compensate for such disproportionate distribution of revenues, but even more, diversification will not save the industry absent a rebalancing.
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.
Under an Executive Order signed into law by Georgia Gov. Brian Kemp earlier this week, theatres are allowed to resume “minimum basic operations” starting Monday, April 24.
[Editor’s note: The novel coronavirus (COVID-19) pandemic is rapidly evolving as is its effect on Atlanta, and the City’s businesses and its residents. Click here for What Now Atlanta’s ongoing coverage of the crisis. For guidance and updates on the pandemic, please visit the C.D.C. website.]