AMC Entertainment wants to buy back and revive a handful of bankrupt theaters that are staggering like the rest of the industry under little to no revenue. AMC, pushed by the Department of Justice, sold the theaters when it acquired Georgia-based Carmike Cinemas in 2016.
Now it’s filed a motion in U.S. District Court for the District of Columbia asking to get the locations back so it can keep them viable, a move that would require modifying a 2017 court ordered separation (when the Carmike merger closed) that was supposed to be in effect through March, 2027.
The nation’s largest chain has been asked on numerous conference calls recently if it would consider expanding, given opportunities that might arise in the current situation. This may be the first of many rescues in an anticipated wave of consolidated in the struggling sector. AMC itself was considered a potential candidate for bankruptcy at one point in the COVID crisis but has since gained some runway with a debt restructuring and capital injection.
The theaters and related assets were divested to New Vision Cinemas, a financial vehicle created to receive them. But New Vision in July started liquidation proceedings in Georgia state court after defaulting and abandoning its leases. Under the terms of the original divestiture, AMC either remained financially liable in the event of default by New Vision or had expressly guaranteed the obligations of New Vision, the court document said.
“This modification to the Final Judgment will achieve two outcomes that are in the public interest: (i) it will continue to enhance output by providing the opportunity for theatrical exhibition to continue at certain locations at a time when most theatrical exhibition companies are closing locations and not looking to expand operations; and (ii) it will permit AMC to negotiate a new lease and operate a theatre at affected locations, providing the landlords with much needed revenue to help mitigate the financial obligations arising from New Vision’s default and the general economic hardship on the landlords that has resulted from the COVID-19 pandemic,” the court filing said.
AMC asks the court “to modify the Final Judgment entered in this case,” saying “this relief is sought because of unforeseen and unique changed circumstances that have arisen from the ongoing COVID-19 pandemic.”