Cineplex has called Cineworld's decision to terminate the deal "nothing more than a case of buyer’s remorse" and seeks more than
The case wouldn't change Cineworld's decision to scrap the Cineplex deal, but legal and entertainment experts say it will offer a window into the future of Canadian movie-going and may inspire further suits.
"It's a test case of what happens when you have an adverse industry that was affected (by COVID) and parties don't or can't meet the terms of the contract," said
"This could be the beginning of a wave of cases to come. Lawyers and companies are going to look at this with great interest."
The case will hinge on Cineworld arguing it had the right to terminate the agreement without payment because Cineplex strayed from "ordinary course," when it deferred its accounts payable by at least 60 days, reduced spending to the "bare minimum" and stopped paying landlords, movie studios, film distributors and suppliers at the pandemic's start.
Cineworld alleged the changes were meant "to present a more favourable long term debt position in its financial statements than was actually the case" and "cannot be excused by the outbreak of the novel coronavirus."
Cineplex's statement of claim shows it will argue it fulfilled all of its obligations and that it continued with an "ordinary course" for the industry.
Cineplex will also claim Cineworld did not have grounds to terminate the deal because there was a clause exempting outbreaks of illness or changes affecting the motion picture theatre industry from being considered "material adverse effects."
Both companies declined to comment because the matter is before the court, which will decide what contract obligations are in play if an act of god or illness occurs and what constitutes "ordinary course" during a pandemic.
There's a lot at stake for both sides.
The theatre industry has been struggling since cinemas were forced to close due to public health measures during COVID-19 and studios pushed back premieres or skipped theatrical releases in favour of streaming platforms.
Cineplex reported a
Cineworld, which has 786 theatres across the
Losing the case would deepen those financial troubles because Cineplex wants Cineworld to pay the
Cineplex is also seeking compensation for the
Regardless of how the lawsuit ends,
The
"If
But that doesn't mean the end of big theatre chains is coming. Moore thinks they will remain with a focus on blockbusters and no overlap between independent cinemas showing "anything remotely off the beaten path."
Theatres, he predicts, will become a more premium experience like visiting a suburban theme park or one of Cineplex's RecRoom dining and gaming facilities.
"Some version of movie-going will continue," he said, "I'm certain of it."
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