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Company Asked To Walk From Lease, Waiting on Bankruptcy Court Judge In Texas
By Tina Traster
The curtain may drop soon, permanently. Regal Cinema at the Shops at Nanuet may close its doors early next year.
The closures come on the heels of Cineworld Group PLC, Regal’s parent company, filing for bankruptcy in the Southern District of Texas in Houston earlier this year. United States Bankruptcy Judge Marvin Isgur may give permission to Cineworld to reject 20 existing leases, including the Nanuet Stadium 12 at The Shops at Nanuet. Under the proposed court order, Regal can shutter the theater as soon as January 15th and turn over the keys to Simon Property Group.
In the Chapter 11 bankruptcy reorganization, the movie chain asked the court to allow it to terminate leases on theaters it deemed unprofitable. The court order would permit Cineworld to exit its leases on the 20 properties with no further obligation to the landlords.
Simon Property Group always has the option to renegotiate the lease terms and try to keep the theater open.
The court also would permit the company to abandon all the property at each location, leaving the landlord with the obligation to either re-lease or gut the property at the landlord’s expense.
The closure of the Regal Cinema would mark the second loss of a movie theater: the Bow-Tie Theater in New City also recently closed.
The list of proposed rejected leases includes Regal Cinemas in Turnersville, NJ, Hyannis, MA, and on West 42 Street in New York City’s Time Square known as the E-Walk Stadium 13. The balance of the theaters area spread around the nation.
Headquartered in the UK, the publicly traded company is the second-largest cinema chain operating under five major brands in more than 750 locations in ten countries.
As of the initial bankruptcy filing, the theater chain represented that its businesses have been severely impacted by the coronavirus pandemic, including a decline in cinema attendance and a rise in online streaming.
The chain, which has hundreds of leases for nearly 10,000 screens, had taken critical steps since COVID to ease its financial burden caused by underperforming theaters, many of which are subject to off-market lease terms that no longer reflect the value of real estate in the economy.
Over the past two and a half years, according to Cineworld, the company has attempted “extensive good-faith and arm’s-length negotiations with their landlords, reached agreement on various lease restructurings that provided among other things, the deferral of rent, in some cases.”
While such actions have provided breathing room, the industry has not been able to rebound from the pandemic and the relief on some leases did not deliver a long-term solution to the company’s financial problems, according to the bankruptcy filings.
In recent months, the Shops at Nanuet has shown positive signs of emerging from the pandemic.
Even before the coronavirus pandemic, The Shops were flailing, losing major chain tenants at a fast clip. High-end corporate names left the center, leaving an unprecedented number of empty stores, among them Starbucks. By the end of the pandemic, the outdoor mall along Route 59 looked ghostly and anemic. But a recent burst of new tenancies appears to be breathing new life into the mall – with a mix of new tenants including Fidelity Investments, independent business owners like Saba Rugs & Flooring, and a raft of new food and beverage operators including Roast’d Coffee.