November 23, 2020 – In anticipation of their November 24th Plan confirmation hearing, the Debtors have filed (i) a memorandum of law in support of confirmation of Plan confirmation (the "Memorandum") [Docket No. 912], (ii) Plan voting results [Docket No. 911], (iii) a witness and exhibit list in respect of the confirmation hearing [Docket no. 917] and (iv) a Plan Supplement [Docket No. 885]. The Debtors have not filed a proposed confirmation order.

Overview of the Plan

The Memorandum [Docket No. 912] provides the following pre-confirmation hearing assessment: “The Debtors’ reorganization has been marked by consistent progress — and, ultimately, global consensus amongst key stakeholders — nearly every step of the way. Facing the unprecedented COVID-19 pandemic, the Debtors commenced these cases. Immediately thereafter, the Debtors turned their attention to building broad consensus with the rest of their stakeholder base, including the Official Committee of Unsecured Creditors (the ‘Committee‘).

After nearly seven months of hard-fought negotiations with the Committee, landlords, studios, and other creditors, the Debtors have a consensual Plan, supported by the Committee and numerous of the Debtors’ landlords. Under the Plan, the Debtors will emerge as a leaner, well-capitalized company, having consummated a transformative restructuring in less than eight months—no small or easy task for a movie theater business in the midst of a pandemic. The Debtors have also worked diligently and in good faith to resolve all formal and informal objections to confirmation of the Plan (the ‘Objections’ and, such parties, the ‘Objectors’). As of the filing of this Memorandum, all objections except that filed by MN Theaters 2006, LLC at ECF No. 863 (‘MN Theaters’ and the ‘MN Objection‘) have been substantively resolved by consent. As detailed herein, the Bankruptcy Court should overrule the ["remarkable" and "absurd"] MN Objection outright.”

The Third Amended Disclosure Statement [Docket No. 773] notes, “The Plan provides for a reorganization of the Debtors as a going concern, with a reduced number of theaters to focus on profitable locations.

• Holders of Secured Claims will receive, at the applicable Debtor’s option, (i) payment in full in Cash; (ii) delivery of the collateral securing any such Claim; (iii) payment of any interest required under section 506(b) of the Bankruptcy Code; (iv) reinstatement of such Claim; or (v) such other treatment rendering such Claim Unimpaired. The Debtors have few to no secured claims and anticipate distributions to this class to be negligible.
• Each Holder of Syndicated Bank Loan Claims will receive its Pro Rata share of the Syndicated Bank Loan Claims Allocation, consisting of the compromise amount of $1,000,000. For the avoidance of doubt, the Syndicated Bank Loan Claims are allowed under the Plan in the amount, as of the Petition Date, of $159,113,879.40. The compromise distribution to the Holders of Syndicated Bank Loan Claims is in full satisfaction of any claims or causes of action that any Releasing Party or the Debtors may have with respect to the Syndicated Bank Loan.
• Each Holder of a GUC Claim in Class 4 will receive (i) its Pro Rata share of the GUC Claims Trust (Net Assets consisting of approximately $5.3 million plus a variable note equal to 8% of theater-level cash flow or 'TLCF' (similar to operating cash flow) for the next three years net of amounts paid to Holders of Convenience Claims (approximately $190,000) and amounts paid to the GUC Trustee to administer the GUC Trust (approximately $350,000); provided that to the extent such GUC Claim is a Convenience Claim, such Holder will receive its Pro Rata share of the Convenience Claims Distribution. This allocation, subject to highly variable estimated totals of Claims in Class 4 and the speculative value of the TLCF Note, is projected to yield approximately 15% to Holders in this Class.
• Each Holder of a Convenience Claim (Holders of Claims that equal $15,000 or less or that elect to reduce their Claim to $15,000) will receive a Cash distribution equal to 12% of its Convenience Claim on or after the Effective Date.
• Intercompany Claims will be canceled, discharged, released and extinguished in full as of the Effective Date.
• Intercompany Interests will be reinstated as of the Effective Date for administrative purposes only, as a means to preserve the corporate structure for holding company purposes and avoid the unnecessary cost of having to reconstitute that structure. There is no distribution under the Plan on account of Intercompany Interests.
• Interests in Cinemex Holdings will be deemed canceled, discharged, released and extinguished, and there will be no distribution to Holders of Interests in Cinemex Holdings on account of such Interests.”

The following is the third amended summary of classes, claims, voting rights and expected recoveries showing highlighted changes (defined terms are as defined in the Plan and/or Disclosure Statement, see also the Liquidation Analysis below):

• Class 1 (“Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $0 and estimated recovery is 100%.
• Class 2 (“Other Priority Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $0 and estimated recovery is 100%. 
• Class 3 (“Syndicated Bank Loan Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $159.1mn and estimated recovery is 0.6%. The Syndicated Bank Loan Claims are allowed in the full amount due and owing under the Syndicated Bank Loan Credit Agreement, which, as of the Petition Date, is $159,113,879.40. Each  Holder will receive its Pro Rata share of the Syndicated Bank Loan Claims Allocation.
• Class 4 (“GUC Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $50.0mn – $60.0mn and estimated recovery is 11.4% – 15.3%. Holders of GUC Claims will receive their Pro Rata share of approximately $5.3 million in cash plus a variable note from the Reorganized Debtors equal to 8% of theater-level cash flow or “TLCF” (similar to operating cash flow) for the next three years net of amounts paid to Allowed Convenience Claims (approximately $190,000) and amounts paid to the GUC Trustee to administer the GUC Trust (approximately $350,000).
• Class 5 (“Convenience Claims”) is impaired and entitled to vote on the Plan. The estimated aggregate amount of claims is $1.13mn and estimated recovery is 12%. Claimants with Convenience Claims that are $15,000 or less or that elect to reduce their Claims to $15,000 will receive 12% of such Claims in cash on the Effective Date.
• Class 6 (“Intercompany Claims”) is impaired, deemed to reject and not entitled to vote on the Plan. The aggregate amount of claims is $61.9mn and estimated recovery is 0%.
• Class 7 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The estimated aggregate amount of claims is N/A and estimated recovery is N/A.
• Class 8 (“Interests in Cinemex Holdings”) is unimpaired, deemed to reject and not entitled to vote on the Plan. The estimated aggregate amount of claims is $0 and estimated recovery is 0%. 

Voting Results

On November 23, 2020, the Debtors' claims agent notified the Court of the Plan voting results, which were as follows [Docket No. 911]:

• Class 3 (“Syndicated Bank Loan Claims”): 13 claim holders, representing $292,180,816.72 (100%) in amount and 100% in number, voted in favor of the Plan. 1 invalid vote.
• Class 4 (“GUC Claims”): 26 claim holders, representing $29,023,214.96 (69.67%) in amount and 83.87% in number, voted in favor of the Plan. 5 claims holders, representing $12,636,958.70 (30.33%) in amount and 16.13% in number, rejected the Plan. 8 invalid votes.
• Class 5 (“Convenience Claims”): 31 claim holders, representing $122,547.41 (100%) in amount and 100% in number, voted in favor of the Plan. 2 invalid votes.

The Debtors filed a Plan Supplement [Docket No. 885] which attached the following:

• Exhibit A: New Organizational Documents (such certificates or articles of incorporation, by-laws, limited liability company operating agreements, stockholders’ agreements, or other applicable formation and governance documents of each of the Reorganized Debtors, as applicable); 
• Exhibit B: Assumed Executory Contract and Unexpired Lease List 
• Exhibit C: Rejected Executory Contract and Unexpired Lease List
• Exhibit D: Stock Purchase Agreement
• Exhibit E: Schedule of Retained Causes of Action
• Exhibit F: Schedule of members of the Reorganized Cinemex Board and management for the Reorganized Debtors
• Exhibit G: Cap-Ex Escrow Agreement
• Exhibit H: GUC Claims Trust Agreement
• Exhibit I: Governance Term Sheet
• Exhibit J: List of Insurance Policies
• Exhibit K: Opt Out Form
• Exhibit L: List of Theaters
• Exhibit M: Form of TLCF Note

The GUC Claims Trust 

The Third Amended Disclosure Statement reflects the creation of “The GUC Claims Trust," under which the GUC Claims Trustee will distribute to holders of General Unsecured Claims $5.3mn in net assets, less the amount needed to make a 12% distribution to holders of an estimated $1.13mn in Convenience Claims, as well as a Theater Level Cash Flow Note (the "TLCF Note"). According to the Third Amended Disclosure Statement, under the TLCF Note, the Debtors "shall be obligated to pay eight percent (8%) of Theater Level Cash Flow for all Theaters for the period of January 1 through December 31 of each calendar year, distributed on an annual basis for a period of three years following the Effective Date (each such payment, a 'TLCF Payment').

The initial TLCF Payment shall be paid no later than June 30, 2022, and the two subsequent TLCF Payments shall be paid promptly following the completion of the Debtors’ audited financial statements (but in any event no later than five months after each year’s end even if the Debtors’ audited financial statements are not yet complete), which the Debtors anticipate will be completed in May 2023 and May 2024. For the avoidance of doubt, no interest shall accrue or be payable on account of the TLCF Note unless the Reorganized Debtors fail to make a timely TLCF Payment, in which case interest shall accrue at the rate of fifteen percent (15%) per annum with respect to any such TLCF Payment, commencing on (i) July 1, 2022, with respect to the first TLCF Payment, and (ii) June 1, 2023 and June 1, 2024, respectively, for the second and third TLCF Payments, or such earlier date as any TLCF Payment was due. If any of the Theaters are disposed, closed or contracted to be managed by another party prior to the end of the third year after Plan Confirmation, the GUC Claims Trust shall receive 8% of the projected Theater Level Cash Flow for that location through year 3 (such projection to be reasonably agreed by the GUC Claims Trustee). If any of the Theaters is transferred to an affiliate of the Debtors, that affiliate must assume the obligations under the TLCF Note with respect to any such Theater. All TLCF Payments (and the underlying calculations) shall be subject to audit, following which the TLCF Payments may be adjusted."

To account for the GUC Claims Trust, the Third Amended Plan reduces the proposed distribution to holders of Convenience Claims to 12% from 15% and beefs up a vague description of the proposed treatment of holders of General Unsecured claims in the Second Amended Plan, which references the trust and TLCF Note, but does not provide specific details of those recovery vehicles.

The Third Amended Disclosure Statement stresses that: "This allocation, subject to highly variable estimated totals of Claims in Class 4 and the speculative value of the TLCF Note, is projected to yield approximately 15% to Holders in this Class." Despite that disclaimer, the Second Amended Plan calls for an estimated recovery for holders of General Unsecured Claims ranging from 11.4% to 15.3%."

The Second Amended Disclosure Statement [Docket No. 741] attached the following documents:

• Exhibit A: Plan of Reorganization 
• Exhibit B: Corporate Organization Chart 
• Exhibit C: Disclosure Statement Order 
• Exhibit D: Liquidation Analysis 
• Exhibit E: Financial Projections

Key Dates

• Deadline for objections to confirmation: November 18, 2020
• Deadline for filing Plan Supplement: November 18, 2020
• Deadline for Submitting ballots accepting or rejecting the Third Amended Plan: November 18, 2020
• Confirmation Hearing: November 24, 2020

Liquidation Analysis (see Exhibit D of Disclosure Statement [Docket No. 741] for notes)About the Debtors

CMX Cinemas, a wholly-owned subsidiary of Cinemex, opened its doors in April 2017 at Brickell City Centre, Miami, FL, offering new features to give guests an innovative and VIP movie-going experience. CMX provides state-of-the-art technology that can be enjoyed through different types of experiences: CMX CinéBistro, the luxury dine-in and in-seat service; CMX Market the innovative self-serve food hall movie experience and CMX Premium, the upgraded traditional theater with classic concessions. It also features the trendy and exclusive CMX Stone Sports Bar at select theaters, making CMX the one-stop destination for entertainment. CMX, with the acquisition of Star Cinema Grill, will have 51 sites [NB: take off 10 sites without the Star Cinema acquisition], 504 screens and more than 3,000 employees, in venues located in Florida, Illinois, Minnesota, Georgia, Alabama, North Carolina, Ohio, Virginia, Maryland, New York, New Jersey, Colorado and Texas. New openings are scheduled in Wrigleyville, Chicago, Illinois; American Dream, New Jersey; Coastland, Naples, Florida; and International Mall, Tampa, Florida. 

About Cinemex

Cinemex is one of the top ten cinema chains worldwide, with 351 sites in 104 cities, 3014 screens and more than 14,000 employees. Founded in 1995 with the intent to revolutionize the movie entertainment industry, Cinemex began installing multiplexes and stadium-style seating with the primary focus of attending every guest’s needs. Today Cinemex continues to offer innovating concepts in cinema-going, including Platino Cinemex and Cinemex Premium, state-of-the-art theaters equipped with luxury seating and first-class dining, Cinemex 3D, and the 4D experience. At Cinemex, our main goal is to offer the best entertainment to our guests.

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