Sparks Fly Over Cineworld Bailout, But Judge Says: “I’m Not Going To Sleep Until We Get Those Employees Paid”; Bankrupt Chain Has Just $4M Cash On Hand
deadline.comA federal judge sent a proposed $1.9 billion financing package for bankrupt Cineworld back to the table for a redo but said he’s committed to approving some kind of cash injection quickly for the Regal Cinemas parent.Cineworld filed for Chapter 11 in the Southern District of Texas yesterday with a so-called DIP, or debtor-in-possession, loan from a consortium of lenders to keep operating while it cleans up its balance sheet.
But Judge Marvin Isgur nixed $1 billion of that total earmarked, not for operations, but to refinance pre-petition loans from the same group of debtholders.At a hearing today, lawyers for Cineworld and a majority of DIP lenders seemed flabbergasted when the judge demurred, stressing Cineworld’s dire straits with just $4 million of cash in hand.
That’s “not sufficient to run a global operation,” said James Mesterharm of AlixPartners, the chief restructuring officer Cineworld hired in August to examine its books, leading to yesterday’s bankruptcy filing.Without the DIP loan, the chain would be forced to “curtail their operations, which would be to the detriment of all stakeholders,” he said.The judge offered a few options, suggesting the DIP group set the $1 billion aside for now while they — or others lenders — first address Cineworld’s immediate cash requirements with a stopgap payout in the hundreds of millions, to keep the lights on, something he said he would sign immediately. “I am not going to sleep until we get those employees paid tonight,” he said.The judge also offered a high guaranteed yield of more than 20% to lenders willing to advance cash to Cineworld.“I am trying to be flexible, The only goal there is that the billion dollars has to be delayed until I give people an opportunity to deal
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