Key Facts
- •Cineworld Group plc (the "Company") applied for an administration order and appointment of AlixPartners UK LLP as administrators.
- •The application was due to a steep decline in ticket sales following the pandemic, leading to liquidity issues.
- •The Company and other group entities previously filed for Chapter 11 bankruptcy in the US.
- •A Reorganisation Plan ("Plan") was confirmed by the US Bankruptcy Court, conditional on the Company entering administration in England.
- •The Plan involves a debt-for-equity swap and new money injection.
- •The Company's indebtedness includes a DIP facility, a Cineplex Judgment, and secured legacy borrowings.
- •The Plan's implementation involves a hive-down to Crown UK and the creation of NewCo 2.
- •The application was unopposed.
Legal Principles
A director of a company may apply for an administration order.
Insolvency Act 1986, Schedule B, paragraph 12(1)(b)
The court may make an administration order only if satisfied the company is or is likely to become unable to pay its debts, and that the administration order is reasonably likely to achieve the purpose of administration.
Insolvency Act 1986, Schedule B, paragraph 11
The court must be satisfied it is more probable than not that the company is or will become unable to pay its debts.
Re AA Mutual International Insurance Co Ltd [2005] 2 BCLC 8
The administrator must perform functions with the objective of rescuing the company as a going concern, achieving a better result for creditors than liquidation, or realising property for distribution to secured or preferential creditors.
Insolvency Act 1986, Schedule B, paragraph 3
The court has discretion whether to make an administration order.
Insolvency Act 1986, Schedule B (implied)
Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 may apply to disposals of assets to connected persons.
Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021
Outcomes
Administration order granted.
The court was satisfied that the jurisdictional requirements were met: the company was likely unable to pay its debts, and the administration order was reasonably likely to achieve the purpose of administration (better result for creditors than liquidation). The court also considered the overwhelming creditor support for the Plan and the US court's scrutiny.
AlixPartners UK LLP appointed as administrators.
As per the Company's application and in line with the granted administration order.
Application to dispense with notification and abridge time granted.
In line with the court's overall decision to grant the administration order.