UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF FLORIDA 

MIAMI DIVISION 

www.flsb.uscourts.gov

In re: 

 

CINEMEX USA REAL ESTATE Chapter 11 

HOLDINGS, INC., CINEMEX 

HOLDINGS USA, INC., and CB 

THEATER EXPERIENCE LLC,1

 

Case No. 

 20-14695-LMI 

 

Debtors. (Jointly Administered) 

 / 

DISCLOSURE STATEMENT FOR THIRD AMENDED JOINT CHAPTER 11 PLAN 

OF REORGANIZATION OF CINEMEX USA REAL ESTATE HOLDINGS, INC., 

CINEMEX HOLDINGS USA, INC. AND CB THEATER EXPERIENCE LLC

QUINN EMANUEL URQUHART & 

SULLIVAN LLP 

Patricia B. Tomasco (admitted pro hac 

vice) 

711 Louisiana Street, Suite 500 

Houston, Texas 77002 

Telephone: 713-221-7000 

Facsimile: 713-221-7100 

Email: pattytomasco@quinnemanuel.com 

and 

Juan P. Morillo (FBN 135933) 

1300 I Street, NW, Suite 900 

Washington, D.C. 20005 

Telephone: 202-538-8000 

Facsimile: 202-538-8100 

Email: juanmorillo@quinnemanuel.com 

BAST AMRON LLP 

Jeffrey P. Bast (FBN 996343) 

Brett M. Amron (FBN 148342) 

One Southeast Third Avenue, Suite 1400 

Sun Trust International Center 

Miami, Florida 33131 

Telephone: 305-379-7904 

Facsimile: 305-379-7905 

Email: jbast@bastamron.com 

Email: bamron@bastamron.com 

Co-Counsel to the Debtors and Debtors 

in Possession 

Dated: [●], 2020 

 

1

 The Debtors in these cases and the last four digits of each Debtor’s federal tax identification number are as 

follows: (i) Cinemex USA Real Estate Holdings, Inc. (2194); (ii) Cinemex Holdings USA, Inc. (5502); and (iii) 

CB Theater Experience LLC (0563). The address for the Debtors is 175 South West 7th Street, Suite 1108, 

Miami, Florida 33130. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 1 of 92
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THIS DISCLOSURE STATEMENT HAS 

NOT YET BEEN APPROVED BY THE COURT 

This proposed Disclosure Statement is not a solicitation of acceptance or rejection of the Plan of 

Reorganization. Acceptances or rejections may not be solicited until the Bankruptcy Court has 

approved this Disclosure Statement under section 1125 of the Bankruptcy Code. This proposed 

Disclosure Statement is being submitted for approval only, and has not yet been approved by the 

Bankruptcy Court. 

IMPORTANT INFORMATION ABOUT THIS DISCLOSURE STATEMENT 

The Debtors are providing the information in this document (the “Disclosure Statement”) 

to Holders of Claims and Interests for purposes of soliciting votes to accept or reject the Third 

Amended Joint Chapter 11 Plan of Reorganization of Cinemex USA Real Estate Holdings, Inc., 

Cinemex Holdings USA, Inc. and CB Theater Experience LLC (the “Plan”).1

 Nothing in this 

Disclosure Statement may be relied upon or used by any Entity for any other purpose. Before 

deciding whether to vote for or against the Plan, each Holder entitled to vote should carefully 

consider all of the information in this Disclosure Statement, including the Risk Factors described in 

Article VIII herein. 

[[The Plan is supported by the Debtors and the official committee of unsecured creditors 

appointed in these Chapter 11 Cases (the “Committee”).]] 

The Debtors and the Committee urge Holders of Claims whose votes are being solicited to vote 

to accept the Plan. 

The Debtors urge each Holder of a Claim or Interest to consult with its own advisors with 

respect to any legal, financial, securities, tax, or business advice in reviewing this Disclosure 

Statement, the Plan, and the transactions contemplated thereby. Further, the Bankruptcy Court’s 

approval of the adequacy of the information contained in this Disclosure Statement does not 

constitute the Bankruptcy Court’s approval of the Plan. 

This Disclosure Statement contains, among other things, summaries of the Plan, certain 

statutory provisions, and certain anticipated events in the Debtors’ Chapter 11 Cases. Although 

the Debtors believe that these summaries are fair and accurate, these summaries are qualified in 

their entirety to the extent that they do not set forth the entire text of such documents or statutory 

provisions or every detail of such anticipated events. In the event of any inconsistency or 

discrepancy between a description in this Disclosure Statement and the terms and provisions of the 

Plan or any other documents incorporated herein by reference, the Plan or such other documents 

will govern for all purposes. Factual information contained in this Disclosure Statement has been 

provided by the Debtors’ management except where otherwise specifically noted. The Debtors do 

not represent or warrant that the information contained herein or attached hereto is without any 

material inaccuracy or omission. 

 

1

 Capitalized terms used herein and not otherwise defined shall have the meaning set forth in Article I.A of the 

Plan. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 2 of 92
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In preparing this Disclosure Statement, the Debtors relied on financial data derived from 

their books and records and on various assumptions regarding the Debtors’ business. While the 

Debtors believe that such financial information fairly reflects the financial condition of the Debtors 

as of the date hereof and that the assumptions regarding future events reflect reasonable business 

judgments, no representations or warranties are made as to the accuracy of the financial 

information contained herein or assumptions regarding the Debtors’ business or their future 

results or operations. The Debtors expressly caution readers not to place undue reliance on any 

forward‐looking statements contained herein. 

The Debtors are making the statements and providing the financial information contained 

in this Disclosure Statement as of the date hereof, unless otherwise specifically noted, and there is 

no assurance that the statements contained herein will be correct at any time after such date. 

Although the Debtors may subsequently update the information in this Disclosure Statement, the 

Debtors have no affirmative duty to do so, and expressly disclaim any duty to publicly update any 

forward-looking statements, whether as a result of new information, future events, or otherwise. 

Holders of Claims and Interests reviewing this Disclosure Statement should not infer that, at the 

time of their review, the facts set forth herein have not changed since this Disclosure Statement was 

Filed. Information contained herein is subject to completion, modification, or amendment. The 

Debtors reserve the right to File an amended or modified Plan and related Disclosure Statement 

from time to time, subject to the terms of the Plan. 

The Debtors have not authorized any Entity to give any information about or concerning 

the Plan other than that which is contained in this Disclosure Statement. The Debtors have not 

authorized any representations concerning the Debtors or the value of their property other than as 

set forth in this Disclosure Statement. 

This Disclosure Statement does not constitute, and may not be construed as, an admission of 

fact, liability, stipulation, or waiver. The Debtors or any other authorized party may seek to 

investigate, File, and prosecute Claims and may object to Claims after the Confirmation or 

Effective Date of the Plan irrespective of whether this Disclosure Statement identifies any such 

Claims or objections to Claims. 

If the Plan is confirmed by the Bankruptcy Court and the Effective Date occurs, all Holders 

of Claims and Interests (including those Holders of Claims and Interests who do not submit ballots 

to accept or reject the Plan, who vote to reject the Plan, or who are not entitled to vote on the Plan) 

will be bound by the terms of the Plan and the Restructuring Transactions contemplated thereby. 

The Confirmation and effectiveness of the Plan are subject to certain material conditions 

precedent described herein and set forth in Article IX of the Plan. There is no assurance that the 

Plan will be confirmed, or if confirmed, that the conditions required to be satisfied for the Plan to 

go effective will be satisfied (or waived). 

You are encouraged to read the Plan and this Disclosure Statement in its entirety, including 

Article VIII, entitled “RISK FACTORS,” which begins on page [[39]], before submitting your 

ballot to vote on the Plan. 

The Bankruptcy Court’s approval of this Disclosure Statement does not constitute a 

guarantee by the Bankruptcy Court of the accuracy or completeness of the information contained 

herein or an endorsement by the Bankruptcy Court of the merits of the Plan. 

The information contained in this Disclosure Statement is included for purposes of soliciting 

votes for, and Confirmation of, the Plan and may not be relied on for any other purpose. In the 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 3 of 92
 4 

event of any inconsistency between this Disclosure Statement and the Plan, the relevant provisions 

of the Plan will govern. 

This Disclosure Statement has been prepared in accordance with section 1125 of the 

Bankruptcy Code and Bankruptcy Rule 3016(b) and is not necessarily prepared in accordance with 

federal or state securities laws or other similar laws. This Disclosure Statement has not been 

approved or disapproved by the United States Securities and Exchange Commission (the “SEC”) or 

any similar federal, state, local, or foreign regulatory agency, nor has the SEC or any other agency 

passed upon the accuracy or adequacy of the statements contained in this Disclosure Statement. 

The Debtors have sought to ensure the accuracy of the financial information provided in 

this Disclosure Statement; however, the financial information contained in this Disclosure 

Statement or incorporated herein by reference has not been, and will not be, audited or reviewed 

by the Debtors’ independent auditors unless explicitly provided otherwise. 

Upon Confirmation of the Plan, certain of the securities described in this Disclosure 

Statement will be issued without registration under the Securities Act of 1933, 15 U.S.C. §§ 77a–

77aa, together with the rules and regulations promulgated thereunder (the “Securities Act”), or 

similar federal, state, local, or foreign laws, in reliance on the exemption set forth in section 1145 of 

the Bankruptcy Code. To the extent exemptions from registration under section 1145 of the 

Bankruptcy Code or applicable federal securities law do not apply, the Securities may not be 

offered or sold except pursuant to a valid exemption or upon registration under the Securities Act. 

The Debtors make statements in this Disclosure Statement that are considered forwardlooking statements under federal securities laws. The Debtors consider all statements regarding 

anticipated or future matters, to be forward-looking statements. Forward-looking statements may 

include statements about the Debtors’:

• business strategy; 

• acquisition or disposition of assets, including strategy, amount, timing, and ability to 

effectuate any such transaction; 

• financial strategy; 

• risks associated with the Chapter 11 process, including the Debtors’ ability to develop, 

confirm, and consummate a plan under Chapter 11 or an alternative restructuring 

transaction; 

• inability to maintain relationships with suppliers, customers, employees, and other third 

parties as a result of the Chapter 11 filing or other failure of such parties to comply with 

their contractual obligations; 

• failure to satisfy the Debtors’ short- or long-term liquidity needs, including their 

inability to generate sufficient Cash flow from operations or to obtain adequate 

financing to fund their capital expenditures and meet working capital needs and their 

ability to continue as a going concern; 

• legal proceedings and the effects thereof; 

• ability to operate their theaters due to COVID-19 restrictions; 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 4 of 92
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• capital expenditures; 

• economic and competitive advantages; 

• credit and capital market conditions; 

• regulatory changes; 

• lease operating expenses, general and administrative expenses and development costs; 

• future operating results, including results of acquired properties; and 

• plans, objectives, expectations and intentions. 

Statements concerning these and other matters are not guarantees of the Debtors and the 

Reorganized Debtors’ future performance. There are risks, uncertainties, and other important 

factors that could cause the Debtors and the Reorganized Debtors’ actual performance or 

achievements to be different from those they may project, and the Debtors undertake no obligation 

to update the projections made herein. These risks, uncertainties, and factors may include: the 

Debtors’ ability to confirm and consummate the Plan; the potential adverse impact of the Chapter 

11 Cases on the Debtors’ operations, management, and employees, and the risks associated with 

operating the Debtors’ business during the Chapter 11 Cases; customer responses to the Chapter 

11 Cases; the Debtors’ ability to operate their theaters due to COVID-19 restrictions; the Debtors’ 

inability to discharge or settle Claims during the Chapter 11 Cases; the Debtors’ ability to access 

financing necessary to consummate the Plan; general economic, business, and market conditions; 

currency fluctuations; interest rate fluctuations; price increases; the Debtors’ ability to implement 

cost reduction initiatives in a timely manner; the Debtors’ ability to divest existing business; 

financial conditions of the Debtors’ customers; adverse tax changes; limited access to capital 

resources; changes in domestic and foreign laws and regulations; natural disasters; geopolitical 

instability; and the effects of governmental regulation on the Debtors’ business. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 5 of 92
 i 

TABLE OF CONTENTS 

Page 

I. INTRODUCTION............................................................................................................. 1

II. PRELIMINARY STATEMENT ..................................................................................... 1

III. OVERVIEW OF THE PLAN .......................................................................................... 2

A. Treatment of Creditors ............................................................................................ 2

B. The GUC Claims Trust ........................................................................................... 4

C. Settlement and Compromise ................................................................................... 7

D. Releases................................................................................................................... 8

IV. QUESTIONS AND ANSWERS REGARDING THIS DISCLOSURE 

STATEMENT AND PLAN .............................................................................................. 8

A. What is chapter 11? ................................................................................................. 8

B. Why are the Debtors sending me this Disclosure Statement? ................................ 9

C. Am I entitled to vote on the Plan? .......................................................................... 9

D. What will I receive from the Debtors if the Plan is consummated? ..................... 10

E. What will I receive under the Plan if I hold an Allowed Administrative 

Claim, Professional Fee Claim, Priority Tax Claim, or DIP Loan Claim? ........... 12

1. Administrative Claims .............................................................................. 13

2. Priority Tax Claims ................................................................................... 13

3. DIP Loan Claims....................................................................................... 13

F. What happens to my recovery if the Plan is not confirmed or does not go 

effective? ............................................................................................................... 14

G. What are the sources of Cash and other consideration required to fund the 

Plan? ...................................................................................................................... 14

H. Are there any regulatory approvals required to consummate the Plan? ............... 14

I. Are there risks to owning the New Common Stock upon emergence from 

chapter 11? ............................................................................................................ 14

J. Is there potential litigation related to the Plan? .................................................... 14

K. Will any party have significant influence over the corporate governance 

and operations of the Debtors following consummation of the Plan? .................. 15

L. What is the Management Incentive Plan and how will it affect the 

distribution I receive under the Plan? ................................................................... 15

M. Will operation of the Debtors’ theaters be affected by the Plan? ......................... 16

N. What will happen to Executory Contracts and Unexpired Leases under the 

Plan? ...................................................................................................................... 16

O. What will happen to Insurance Policies under the Plan? ...................................... 17

P. Are the Debtors assuming any indemnification obligations for their current 

officers and directors under the Plan? ................................................................... 17

Q. How will the preservation of the Causes of Action impact my recovery 

under the Plan? ...................................................................................................... 17

1. What Causes of Action are not being preserved? ..................................... 18

R. What might affect the recovery to Holders of Allowed GUC Claims? ................ 19

1. How will the final amount of Allowed GUC Claims affect the 

recovery of Holders of Allowed GUC Claims under the Plan? ................ 19

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 ii 

2. How will the Debtor against which an Allowed GUC Claim is 

Allowed affect the recovery of Holders of Allowed GUC Claims 

under the Plan? .......................................................................................... 19

3. How will Claims asserted with respect to rejection damages affect 

the recovery of Holders of Allowed GUC Claims under the Plan? .......... 20

4. How will the resolution of certain contingent, unliquidated, and 

disputed litigation Claims affect the recovery of Holders of 

Allowed GUC Claims under the Plan? ..................................................... 20

S. If the Plan provides that I get a distribution, do I get it upon Confirmation, 

when the Plan goes effective, or on the Distribution Dates? What is meant 

by “Confirmation,” “Effective Date,” and “Consummation?” ............................. 20

T. What happens to contingent, unliquidated, and disputed Claims under the 

Plan? ...................................................................................................................... 21

U. Will there be releases and exculpation granted to parties in interest as part 

of the Plan? ........................................................................................................... 22

1. Releases by the Debtors ............................................................................ 23

2. Third Party Release ................................................................................... 25

3. Exculpation ............................................................................................... 25

4. Release of Liens. ....................................................................................... 26

5. Releases by the Debtors. ........................................................................... 27

6. Releases by Holders of Claims and Interests. ........................................... 27

7. Exculpation. .............................................................................................. 29

8. Injunction. ................................................................................................. 29

9. Channeling Injunction. .............................................................................. 30

V. What impact does the Claims Bar Date have on my Claim? ................................ 31

W. What is the effect of the Plan on the Debtors’ ongoing business? ........................ 31

X. Who do I contact if I have additional questions with respect to this 

Disclosure Statement or the Plan? ........................................................................ 31

Y. What is the deadline to vote on the Plan? ............................................................. 32

Z. How do I vote for or against the Plan? ................................................................. 32

AA. Why is the Bankruptcy Court holding a Confirmation Hearing? ......................... 32

BB. When is the Confirmation Hearing set to occur? .................................................. 32

CC. What is the purpose of the Confirmation Hearing? .............................................. 33

DD. Do the Debtors recommend voting in favor of the Plan? ..................................... 33

EE. Who supports the Plan? ........................................................................................ 33

V. THE DEBTORS’ CORPORATE HISTORY, STRUCTURE, AND 

BUSINESS OVERVIEW................................................................................................ 33

A. The Debtors’ Business .......................................................................................... 33

B. Corporate Structure, Assets and Operations ......................................................... 35

C. Prepetition Capital Structure ................................................................................. 35

1. Syndicated Bank Loan Facility ................................................................. 36

2. GUC Claims .............................................................................................. 36

3. Intercompany Claims ................................................................................ 37

4. Interests in Cinemex Holdings .................................................................. 37

5. Interests in Cinemex Holdings USA, Inc. and CB Theater 

Experience LLC ........................................................................................ 37

VI. EVENTS LEADING TO THE CHAPTER 11 FILINGS ............................................ 37

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 iii 

A. Adverse Market Conditions and Liquidity Constraints ........................................ 37

B. Proactive Approach to Addressing Liquidity Constraints .................................... 37

VII. MATERIAL DEVELOPMENTS AND ANTICIPATED EVENTS OF THE 

CHAPTER 11 CASES .................................................................................................... 38

A. First Day Relief ..................................................................................................... 38

B. Additional Chapter 11 Relief ................................................................................ 38

1. DIP Motions .............................................................................................. 38

2. Cash Management Motion ........................................................................ 39

3. Lease Rejection Motions........................................................................... 39

4. Motion to Abate Rent................................................................................ 40

C. Other Procedural and Administrative Motions ..................................................... 40

D. Retention of Professionals .................................................................................... 41

E. Appointment of Official Creditors’ Committee; Retention of Committee 

Professionals ......................................................................................................... 41

F. Rejection and Assumption of Executory Contracts and Unexpired Leases ......... 41

G. Other Litigation Matters ....................................................................................... 42

1. Prepetition Litigation ................................................................................ 42

2. Postpetition Litigation ............................................................................... 44

3. Automatic Stay Motions ........................................................................... 45

H. Postpetition Restructuring and Sale Process ......................................................... 47

1. Marketing Process ..................................................................................... 47

2. Negotiations with Creditors ...................................................................... 49

I. Expected Timetable of the Chapter 11 Cases ....................................................... 49

VIII. RISK FACTORS ............................................................................................................. 49

A. Bankruptcy Law Considerations ........................................................................... 50

1. Parties in Interest May Object to the Plan’s Classification of 

Claims and Interests .................................................................................. 50

2. The Conditions Precedent to the Effective Date of the Plan May 

Not Occur .................................................................................................. 50

3. The Debtors May Fail to Satisfy Vote Requirements ............................... 50

4. The Debtors May Not Be Able to Secure Confirmation of the Plan ........ 50

5. Nonconsensual Confirmation.................................................................... 51

6. The Chapter 11 Cases May Be Converted to Cases under Chapter 7 

of the Bankruptcy Code ............................................................................ 51

7. The Debtors May Object to the Amount or Classification of a 

Claim ......................................................................................................... 51

8. Contingencies Could Affect Votes of Impaired Classes to Accept 

or Reject the Plan ...................................................................................... 52

9. Releases, Injunctions, and Exculpations Provisions May Not Be 

Approved................................................................................................... 53

10. Risk of Non-Occurrence of the Effective Date ......................................... 53

11. Risk of Loss of Exclusive Right to Propose a Plan .................................. 53

12. Continued Risk upon Confirmation .......................................................... 54

B. Risks Related to the Debtors’ Operations During and After These Chapter 

11 Cases ................................................................................................................ 54

1. The Debtors Will Be Subject to the Risks and Uncertainties 

Associated with the Chapter 11 Cases ...................................................... 54

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 8 of 92
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2. Operating in Bankruptcy for a Long Period of Time May Harm the 

Debtors’ Business ..................................................................................... 55

3. Financial Results May Be Volatile and May Not Reflect Historical 

Trends ....................................................................................................... 55

4. The Debtors’ Operations May Be Restricted By the Availability of 

DIP Financing ........................................................................................... 55

5. Uncertainty Concerning the Debtors’ Ability to Re-Open Their 

Theaters Profitably, Due to Stay at Home Orders and the 

Unavailability of New Films ..................................................................... 56

C. Risks Related to Recoveries Provided Under the Plan ......................................... 56

1. Timing and Amount of Distributions ........................................................ 56

2. The Debtors May Not Be Able to Achieve their Projected 

Financial Results ....................................................................................... 56

3. Certain Tax Implications of the Plan ........................................................ 56

4. The Reorganized Debtors May Not Be Able to Generate Sufficient 

Cash to Service All of their Indebtedness ................................................. 57

5. The Reorganized Debtors May Be Adversely Affected by Potential 

Litigation, Including Litigation Arising Out of the Chapter 11 

Cases or by the Resolution of Pending Litigation Unrelated to the 

Chapter 11 Proceedings ............................................................................ 57

6. Certain Claims May Not Be Discharged and Could Have a 

Material Adverse Effect on the Reorganized Debtors’ Financial 

Condition and Results of Operations ........................................................ 57

IX. SOLICITATION AND VOTING PROCEDURES ..................................................... 57

A. Holders of Claims Entitled to Vote on the Plan .................................................... 58

B. Voting Record Date .............................................................................................. 58

C. Voting on the Plan ................................................................................................ 58

D. Ballots Not Counted .............................................................................................. 58

X. CONFIRMATION OF THE PLAN .............................................................................. 59

A. Requirements for Confirmation of the Plan .......................................................... 59

B. Best Interests of Creditors/Liquidation Analysis .................................................. 59

C. Feasibility .............................................................................................................. 60

D. Acceptance by Impaired Classes .......................................................................... 60

E. Confirmation without Acceptance by All Impaired Classes................................. 61

1. No Unfair Discrimination ......................................................................... 61

2. Fair and Equitable Test ............................................................................. 61

F. Valuation of the Debtors ....................................................................................... 62

G. The Plan Supplement ............................................................................................ 62

XI. CERTAIN SECURITIES LAW MATTERS................................................................ 62

A. New Common Stock ............................................................................................. 62

B. Issuance and Resale of New Common Stock under the Plan ............................... 62

1. Private Placement Exemptions ................................................................. 62

2. Resale of New Common Stock; Definition of Underwriter ...................... 63

3. New Common Stock / Management Incentive Plan ................................. 64

XII. CERTAIN UNITED STATES FEDERAL INCOME TAX 

CONSEQUENCES OF THE PLAN.............................................................................. 64

A. Introduction ........................................................................................................... 64

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B. Certain U.S. Federal Income Tax Consequences to the Debtors and the 

Reorganized Debtors ............................................................................................. 65

1. Cancellation of Debt and Reduction of Tax Attributes ............................ 65

2. Limitation of NOL Carryforwards and Other Tax Attributes ................... 66

C. Certain U.S. Federal Income Tax Consequences to Certain U.S. Holders of 

Claims ................................................................................................................... 68

1. Recapitalization Treatment - Determination of “Security” Status ............ 68

2. U.S. Federal Income Tax Consequences to U.S. Holders of 

Allowed Class 3, Class 4, Class 5, and Class 6 Claims ............................ 68

3. Accrued Interest ........................................................................................ 69

4. Market Discount........................................................................................ 70

5. Limitation on Use of Capital Losses ......................................................... 70

6. U.S. Federal Income Tax Consequences to Holders of Owning and 

Disposing of Shares of New Common Stock ........................................... 71

7. Medicare Tax ............................................................................................ 71

D. Certain U.S. Federal Income Tax Consequences to Certain Non-U.S. 

Holders of Claims ................................................................................................. 71

1. Gain Recognition ...................................................................................... 71

2. Accrued and/or Imputed Interest .............................................................. 72

3. U.S. Federal Income Tax Consequences to Non-U.S. Holders of 

Owning Shares of New Common Stock ................................................... 73

4. Sale, Redemption, or Repurchase of New Common Stock ...................... 73

5. FATCA ..................................................................................................... 74

E. Information Reporting and Back-Up Withholding ............................................... 75

XIII. RECOMMENDATION .................................................................................................. 75

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EXHIBITS1

EXHIBIT A Plan of Reorganization 

EXHIBIT B Corporate Organization Chart 

EXHIBIT C Disclosure Statement Order 

EXHIBIT D Liquidation Analysis 

EXHIBIT E Financial Projections 

 

1

 Each Exhibit is incorporated herein by reference. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 11 of 92
 1 

I. INTRODUCTION 

Cinemex USA Real Estate Holdings, Inc., Cinemex Holdings USA, Inc., and CB Theater 

Experience LLC, as debtors and debtors in possession (collectively, the “Debtors”) submit this disclosure 

statement (this “Disclosure Statement”) pursuant to section 1125 of the Bankruptcy Code to Holders of 

Claims against and Interests in the Debtors in connection with the solicitation of votes to accept or reject 

the Third Amended Joint Chapter 11 Plan of Reorganization of Cinemex USA Real Estate Holdings, Inc., 

Cinemex Holdings USA, Inc., and CB Theater Experience LLC, (the “Plan”), filed on October 28, 2020 

(ECF No. ____).1 A copy of the Plan is attached hereto as Exhibit A and incorporated herein by 

reference.

THE DEBTORS AND THE COMMITTEE BELIEVE THAT THE TREATMENT OF 

CLAIMS AND INTERESTS UNDER, AND THE RESTRUCTURING TRANSACTIONS 

CONTEMPLATED BY, THE PLAN ARE FAIR AND EQUITABLE, MAXIMIZE THE VALUE 

OF THE DEBTORS’ ESTATES, AND PROVIDE THE BEST RECOVERY TO CLAIM 

HOLDERS. AT THIS TIME, THE DEBTORS BELIEVE THE PLAN IS THE BEST 

AVAILABLE ALTERNATIVE FOR COMPLETING THE CHAPTER 11 CASES IN A TIMELY 

MANNER AND STRONGLY RECOMMEND THAT YOU VOTE TO ACCEPT THE PLAN. 

II. PRELIMINARY STATEMENT 

The Debtors are in the movie theater business. Prior to the Petition Date, the Debtors operated 41 

movie theaters in dozens of cities in 12 states, including Florida, Alabama, Colorado, Georgia, Illinois, 

Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, and Virginia. The theaters operate 

under the brand name “CMX Cinemas.” As of March 31, 2020, the Debtors, on a consolidated basis, had 

assets in the form of theater leases, equipment, furniture, and intangibles with a book value of 

approximately $353 million. 

Before the onset of the COVID-19 pandemic and nationwide shutdowns, the Debtors were 

generating limited revenues in light of obligations to pay high fixed costs in the form of rent to landlords 

and fees to studios. The Debtors were spending approximately 30% of annual revenues on lease-related 

expenses and paying substantial fees to film studios. For example, in 2019, Cinemex had over $123 

million in expenditures on leases and payments to film studios, which totaled close to 55% of the 

Debtors’ total expenses. Indeed, the Debtors’ expenses totaled over $227 million, but the Debtors only 

generated gross revenues of $208.5 million. The Debtors made up the shortfall by borrowing money from 

Grupo Cinemex and Operadora de Cinemas. 

The COVID-19 pandemic and nationwide shutdowns made the Debtors’ financial situation far 

worse. On March 16, 2020, the U.S. federal government issued guidelines to try to slow the spread of 

COVID-19, which included avoiding eating or drinking in restaurants and bars, and shopping trips or 

social visits. Within a week, the states in which the Debtors operate theaters began imposing “stay at 

home” or “lockdown” orders. These orders directed people to stay at home except for “essential” 

activities, but movie theaters are not deemed essential activities. As a result, all 41 of the Debtors’ 

theaters were shut down for at least 7 weeks, and the vast majority remain subject to these orders. 

Specifically, the Debtors closed all of their theaters by March 19, 2020 to protect the health and safety of 

their employees and customers. Throughout most of the summer of 2020, the Debtors did not show a 

 

1

 Capitalized terms used herein and not otherwise defined shall have the meaning ascribed to them in Article I.A 

of the Plan. The summary of the Plan provided herein is qualified in its entirety by reference to the Plan. 

In the case of any inconsistency between this Disclosure Statement and the Plan, the Plan will govern. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 12 of 92
 2 

single movie or sell any food or beverages in their theaters, and the Debtors were compelled to furlough 

all but 30 of their approximately 2,500 employees. 

Certain of the stay at home orders have since expired or restrictions have been modified to allow 

movie theaters to operate at partial capacity. On September 3, 2020, the Debtors resumed limited 

operations in a small number of theaters. However, there is still significant uncertainty as to whether and 

when theaters will be permitted to open at full capacity, and whether (and when) people will begin to 

return to engaging in activities that involve being in public places and in close proximity with others, such 

as attending movies. 

Through the Chapter 11 Cases, the Debtors have been engaged in: (i) identifying which theaters 

are not profitable, which ones are profitable, and which ones can be profitable; and (ii) renegotiating 

leases with landlords and revenue-sharing agreement with studios. To date, the Debtors have filed 

motions to reject 18 of their 41 leases, and are engaged in, or have successfully completed, negotiations 

with the remaining landlords. These negotiations have been largely successful, as the Debtors have 

negotiated revised lease terms with many of their landlords that incorporate some form of percentage rent 

to weather the current depressed demand for theater experiences. 

The Debtors have also dedicated substantial efforts evaluating their options for a viable exit 

strategy. Those options include a sale of the Debtors’ business, a potential plan of reorganization, or a 

sale of reissued shares in Cinemex Holdings. Based on discussions their advisers, and with the 

Committee and its advisors, the Debtors have determined that a restructuring of their business through an 

equity sale implemented through a chapter 11 plan is the best way to maximize the value of the estates. 

To that end, the Debtors have undertaken to market the proposed sale of equity to potential buyers, and 

obtained approval of the Bidding Procedures to create a fair and orderly process to solicit bids on either 

the stock in the Debtors or their assets, while maintaining the flexibility to reorganize the Debtors. While 

the Plan originally contemplated a potential sale of the Debtors’ assets, the result of the Debtors’ 

marketing effort indicates that issuance of New Common Stock of Cinemex Holdings to a purchaser as a 

going concern provides the highest and best option to maximize distributions to creditors. 

III. OVERVIEW OF THE PLAN 

The Plan provides for a reorganization of the Debtors as a going concern, with a reduced number 

of theaters to focus on profitable locations. 

A. Treatment of Creditors 

Pursuant to the Plan, unless a creditor agrees to less favorable treatment: 

• Holders of Allowed 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 Allowed 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 Allowed Syndicated Bank Loan Claims is in full satisfaction of 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 13 of 92
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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 an Allowed GUC Claim in Class 4 will receive 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 Allowed 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 an Allowed Convenience Claim (Holders of Claims that equal $15,000 or less 

or that elect to reduce their Claim to $15,000) will receive, in full and final satisfaction, 

settlement, release, and discharge of and in exchange for each Allowed Convenience Claim, a 

Cash distribution equal to 12% of its Allowed 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. 

On the Effective Date, the Debtors or the Reorganized Debtors, as applicable, in consultation 

with the Committee, will effectuate the Restructuring Transactions, and will take any actions as may be 

necessary or advisable to effect a corporate restructuring of their respective business. The actions to 

implement the Restructuring Transactions may include, as applicable, and without limitation: (1) the 

execution and delivery of appropriate agreements or other documents of merger, amalgamation, 

consolidation, restructuring, conversion, disposition, transfer, arrangement, continuance, dissolution, sale, 

purchase, or liquidation containing terms that are consistent with the terms of the Plan and that satisfy the 

requirements of applicable law and any other terms to which the applicable Entities may agree, including, 

if applicable, the formation of any entity or entities that will constitute, in whole or in part, the 

Reorganized Debtors, and the consolidation of the Debtors’ estates for distribution purposes only; (2) the 

execution and delivery of appropriate instruments of transfer, assignment, assumption, or delegation of 

any asset, property, right, liability, debt, or obligation on terms consistent with the terms of the Plan and 

having other terms for which the applicable parties agree, including the execution and delivery of the 

GUC Claims Trust Agreement; (3) the filing of appropriate certificates or articles of incorporation, 

formation, reincorporation, merger, consolidation, conversion, amalgamation, arrangement, continuance, 

dissolution, or other organizational documents pursuant to applicable state law; (4) the execution and 

delivery of the New Organizational Documents; (5) the execution and delivery of the Cap-Ex Escrow 

Agreement; (6) the consummation of the Stock Purchase Agreement and the issuance of the New 

Common Stock as set forth in the Plan; and (7) all other actions that the applicable Entities determine to 

be necessary or advisable, including making filings or recordings that may be required by law in 

connection with the Plan. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 14 of 92
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The Confirmation Order shall and shall be deemed to, pursuant to sections 363 and 1123 of the 

Bankruptcy Code, authorize, among other things, all actions as may be necessary or appropriate to effect 

any transaction described in, approved by, contemplated by, or necessary to effectuate the Plan, including 

the Restructuring Transactions. 

The Debtors are the proponents of the Plan within the meaning of section 1129 of the Bankruptcy 

Code. 

B. The GUC Claims Trust 

(1) Creation and Governance of the GUC Claims Trust. On the Effective Date, the Debtors, the 

Reorganized Debtors and GUC Claims Trustee shall be authorized to take all actions necessary to 

establish the GUC Claims Trust in accordance with the Plan and the GUC Claims Trust Agreement. 

Additionally, on the Effective Date, the Debtors shall transfer and shall be deemed to transfer to the GUC 

Claims Trust all of their rights, title and interest in and to all of the GUC Claims Trust Assets, and in 

accordance with section 1141 of the Bankruptcy Code, the GUC Claims Trust Assets shall automatically 

vest in the GUC Claims Trust free and clear of all Claims and Liens, and such transfer shall be exempt 

from any stamp, real estate transfer, mortgage reporting, sales, use or other similar tax. The GUC Claims 

Trustee shall be the exclusive administrator of the assets of the GUC Claims Trust for purposes of 31 

U.S.C. § 3713(b) and 26 U.S.C. § 6012(b)(3), as well as the representatives of the Estate of each of the 

Debtors appointed pursuant to section 1123(b)(3)(B) of the Bankruptcy Code, solely for purposes of 

carrying out the GUC Claims Trustee’s duties. The GUC Claims Trust shall be administered by the GUC 

Claims Trustee. The powers, rights, and responsibilities of the GUC Claims Trustee shall include the 

authority and responsibility to, among other things, take the actions set forth in the Plan and shall be set 

forth in the GUC Claims Trust Agreement. The GUC Claims Trustee shall hold and distribute the GUC 

Claims Trust Assets in accordance with the provisions of the Plan and the GUC Claims Trust Agreement. 

After the Effective Date, the Debtors and the Reorganized Debtors shall have no interest in the GUC 

Claims Trust Assets except as set forth herein or the GUC Claims Trust Agreement. 

(2) GUC Claims Trust Assets. “GUC Claims Trust Assets” means (i) the GUC Claims 

Allocation (of $5,325,000), less the Convenience Claims Distribution, and (ii) the TLCF Note and all 

rights and interests thereto, including but not limited to, any payments made in respect thereof 

(3) TLCF Note. TLCF Note means the note payable to the GUC Claims Trust, substantially in 

the form set forth in the Plan Supplement, pursuant to which the Reorganized 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 the affiliate must assume the obligations under the TLCF 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 15 of 92
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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. 

(4) GUC Claims Trustee and GUC Claims Trust Agreement. The GUC Claims Trustee will, 

among other things, administer the GUC Claims Trust Assets and will be the Estates’ representative with 

respect to the settlement, release, allowance, disallowance, or compromise of GUC Claims in accordance 

with the Plan and the Bankruptcy Code. The GUC Claims Trust Agreement generally will provide for, 

among other things: (i) the transfer of the GUC Claims Trust Assets to the GUC Claims Trust; (ii) the 

payment of certain reasonable expenses of the GUC Claims Trust from the GUC Claims Trust Assets; 

and (iii) distributions to holders of Allowed GUC Claims who are GUC Claims Trust Beneficiaries, as 

provided herein and in the GUC Claims Trust Agreement. On and after the Effective Date, the GUC 

Claims Trustee shall be responsible for all decisions and duties with respect to the GUC Claims Trust and 

the GUC Claims Trust Assets, except as otherwise provided in the GUC Claims Trust Agreement. 

(5) Cooperation of the Reorganized Debtors. The Debtors or Reorganized Debtors, as 

applicable, upon reasonable notice, shall reasonably cooperate with the GUC Claims Trustee in the 

administration of the GUC Claims Trust, including by providing reasonable access to pertinent 

documents, including books and records, to the extent the Debtors or Reorganized Debtors, as applicable, 

have such information or documents, to the GUC Claims Trustee sufficient to enable the GUC Claims 

Trustee to perform its duties hereunder. The Debtors and Reorganized Debtors, as applicable, shall 

reasonably cooperate with the GUC Claims Trustee in the administration of the GUC Claims Trust, 

including by providing reasonable access to documents and current officers and directors with respect to 

contesting, settling, compromising, reconciling, and objecting to GUC Claims; provided that, in each 

case, the GUC Claims Trustee agrees upon request to reimburse the Reorganized Debtors for reasonable 

out-of-pocket expenses for preservation of documents by the Reorganized Debtors, copying, or similar 

expenses. The collection, review by the Reorganized Debtors, and preservation of documents requested 

by the GUC Claims Trustee shall be at the expense of the GUC Claims Trustee. 

Any audit firm used to audit the financial statements of the Reorganized Debtors or to review the 

calculation of Theater Level Cash Flow must be reasonably acceptable to the GUC Claims Trustee. 

The Reorganized Debtors shall provide quarterly financial statements within 45 days of each 

quarter end, including a calculation of Theater Level Cash Flow to the GUC Claims Trustee for the term 

of the TLCF Note and provide audited financial statements when available. The Reorganized Debtors 

agree to timely provide all reasonable information and support requested by the GUC Claims Trustee or 

his professionals related to Theater Level Cash Flow calculations or projections, or to an audit firm if one 

is so appointed by the GUC Claims Trustee, for the term of the TLCF Note. 

(6) Preservation of Privilege. The Debtors or Reorganized Debtors, as applicable, and the GUC 

Claims Trust shall be deemed to be working in common interest whereby the Debtors will be able to share 

documents, information or communications (whether written or oral) relating to GUC Claims, subject to a 

common interest privilege and a requirement that such documents, information and communications be 

maintained as confidential. The GUC Claims Trust shall seek to preserve and protect all applicable 

privileges attaching to any such documents, information, or communications. The GUC Claims Trustee’s 

receipt of such documents, information or communications shall not constitute a waiver of any privilege. 

All privileges shall remain in the control of the Debtors or Reorganized Debtors, as applicable, and the 

Debtors or Reorganized Debtors, as applicable, retain the exclusive right to waive their own privileges. 

(7) GUC Claims Trust Fees and Expenses. From and after the Effective Date, the GUC Claims 

Trustee, on behalf of the GUC Claims Trust, shall, in the ordinary course of business and without the 

necessity of any approval by the Bankruptcy Court, pay using the GUC Claims Trust Assets the 

reasonable expenses (including any taxes imposed on or payable by the GUC Claims Trust or in respect 

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of the GUC Claims Trust Assets and professional fees) incurred by the GUC Claims Trust and any 

professionals retained by the GUC Claims Trust and any additional amount determined necessary by the 

GUC Claims Trustee to adequately reserve for the operating expenses of the GUC Claims Trust from the 

GUC Claims Trust Assets. The GUC Claims Trustee is authorized to allocate such expenses to, and pay 

them from, the GUC Claims Trust Assets, as the GUC Claims Trustee may determine in good faith is fair 

(such as based upon the GUC Claims Trustee’s good faith determination of the nature or purpose of the 

fee or expense, the relative amount of GUC Claims, or such other matters as the GUC Claims Trustee 

deems relevant) and in accordance with the GUC Claims Trust Agreement. 

(8) Tax Treatment. In furtherance of the GUC Claims Trust, (i) the GUC Claims Trust is 

intended to qualify as a “liquidating trust” within the meaning of Treasury Regulation section 301.7701-

4(d) and in compliance with Revenue Procedure 94-45, 1994-2 C.B. 684, and, thus, as a “grantor trust” 

within the meaning of sections 671 through 679 of the Tax Code to the holders of GUC Claims, 

consistent with the terms of the Plan; (ii) the sole purpose of the GUC Claims Trust shall be the 

liquidation and distribution of the GUC Claims Trust Assets in accordance with Treasury Regulation 

section 301.7701-4(d), including the resolution of Other General Unsecured Claims in accordance with 

this Plan, with no objective to continue or engage in the conduct of a trade or business; (iii) all parties 

(including, without limitation, the Debtors, the Reorganized Debtors, holders of Allowed GUC Claims 

receiving interests in the GUC Claims Trust, and the GUC Claims Trustee) shall report consistently with 

such treatment; (iv) all parties (including the Debtors, the Reorganized Debtors, holders of Allowed GUC 

Claims receiving interests in the GUC Claims Trust, and the GUC Claims Trustee) shall report 

consistently with the valuation of the GUC Claims Trust Assets transferred to the GUC Claims Trust as 

determined by the GUC Claims Trustee (or its designee); (v) the GUC Claims Trustee shall be 

responsible for filing all applicable tax returns for the GUC Claims Trust as a grantor trust pursuant to 

Treasury Regulation section 1.671-4(a); and (vi) the GUC Claims Trustee shall annually send to each 

holder of an interest in the GUC Claims Trust a separate statement regarding the receipts and 

expenditures of the trust as relevant for U.S. federal income tax purposes. In conformity with Revenue 

Procedure 94-45, all parties (including, without limitation, the Debtors, the GUC Claims Trustee and 

GUC Claims Trust Beneficiaries) will be required to treat the transfer of the GUC Claims Trust Assets to 

the GUC Claims Trust, for all purposes of the Code, as (1) a transfer of the GUC Claims Trust Assets 

(subject to any obligations relating to those assets) directly to the GUC Claims Trust Beneficiaries (other 

than to the extent any GUC Claims Trust Assets are allocable to Disputed Claims), followed by (2) the 

transfer by such beneficiaries to the GUC Claims Trust of GUC Claims Trust Assets in exchange for 

GUC Claims Trust Interests. For all U.S. federal income tax purposes, all parties must treat the GUC 

Claims Trust as a grantor trust of which holders of Claims who become GUC Claims Trust Beneficiaries 

(as determined for U.S. federal income tax purposes) are the owners and grantors. Subject to definitive 

guidance from the Internal Revenue Service or a court of competent jurisdiction to the contrary (including 

the receipt by the GUC Claims Trustee of a private letter ruling if the GUC Claims Trustee so requests 

one, or the receipt of an adverse determination by the Internal Revenue Service upon audit if not 

contested by the GUC Claims Trustee), the GUC Claims Trustee may timely elect to (i) treat any portion 

of the GUC Claims Trust allocable to Disputed Claims as a “disputed ownership fund” governed by 

Treasury Regulation section 1.468B-9 (and make any appropriate elections) and (ii) to the extent 

permitted by applicable law, report consistently with the foregoing for state and local income tax 

purposes. If a “disputed ownership fund” election is made, all parties (including the Debtors, the 

Reorganized Debtors, holders of Allowed GUC Claims receiving interests in the GUC Claims Trust, and 

the GUC Claims Trustee) shall report for United States federal, state, and local income tax purposes 

consistently with the foregoing. The GUC Claims Trustee may request an expedited determination of 

taxes of the GUC Claims Trust, including any reserve for Disputed Claims, under section 505(b) of the 

Bankruptcy Code for all tax returns filed for, or on behalf of, the GUC Claims Trust for all taxable 

periods through the dissolution of the GUC Claims Trust. 

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(9) Non-Transferability of GUC Claims Trust Interests. Any and all GUC Claims Trust Interests 

shall be non-transferable other than if transferred by will, intestate succession, or otherwise by operation 

of law. In addition, any and all GUC Claims Trust Interests will not constitute “securities” and will not be 

registered pursuant to the Securities Act or any applicable state or local securities law. However, if it 

should be determined that any such interests constitute “securities,” the exemption provisions of Section 

1145 of the Bankruptcy Code will be satisfied and the offer, issuance and distribution under the Plan of 

the GUC Claims Trust Interests will be exempt from registration under the Securities Act and all 

applicable state and local securities laws and regulations. 

(10) Dissolution of the GUC Claims Trust. The GUC Claims Trustee and GUC Claims Trust 

shall be discharged or dissolved, as the case may be, at such time as all distributions required to be made 

by the GUC Claims Trustee under the Plan have been made. 

(11) Indemnification and Limitation of Liability. The GUC Claims Trustee and each of its 

respective accountants, agents, assigns, attorneys, bankers, consultants, directors, employees, executors, 

financial advisors, investment bankers, real estate brokers, transfer agents, independent contractors, 

managers, members, officers, partners, predecessors, principals, professional persons, representatives, 

affiliate, employer and successors (each, an “Indemnified Party”) shall be indemnified for, and defended 

and held harmless against, by the GUC Claims Trust and solely from the GUC Claims Trust Assets, any 

loss, liability, damage, judgment, fine, penalty, claim, demand, settlement, cost, or expense (including the 

reasonable fees and expenses of their respective professionals) actually incurred without gross negligence, 

willful misconduct, or fraud on the part of the applicable Indemnified Party (which gross negligence, 

willful misconduct, or fraud, if any, must be determined by a Final Order of a court of competent 

jurisdiction) for any action taken, suffered, or omitted to be taken by the Indemnified Parties in 

connection with the acceptance, administration, exercise, and performance of their duties under the Plan 

or the GUC Claims Trust Agreement, as applicable if the applicable Indemnified Party acted in good faith 

and in a manner reasonably believed to be in, or not opposed to, the best interest of the GUC Claims Trust 

or its beneficiaries. An act or omission taken with the approval of the Bankruptcy Court, and not 

inconsistent therewith, will be conclusively deemed not to constitute gross negligence, willful 

misconduct, or fraud. The amounts necessary for the indemnification provided in this section (including, 

but not limited to, any costs and expenses incurred in enforcing the right of indemnification in this 

section) shall be paid out of the GUC Claims Trust Assets. The GUC Claims Trustee shall not be 

personally liable for the payment of any GUC Claims Trust expense or claim or other liability of the GUC 

Claims Trust, and no Person shall look to the GUC Claims Trustee personally for the payment of any 

such expense or liability. The indemnification provided in this section shall survive the death, 

dissolution, incapacity, resignation or removal of the GUC Claims Trustee, Indemnified Party or the 

termination of the GUC Claims Trust, and shall inure to the benefit of each Indemnified Party’s heirs and 

assigns. 

C. Settlement and Compromise 

The Plan shall be deemed a motion to approve the good-faith compromise and settlement set forth 

in the Plan pursuant to section 1123 of the Bankruptcy Code and Bankruptcy Rule 9019, and in 

consideration for the benefits provided under the Plan, upon the Effective Date, the provisions of the Plan 

shall constitute a good faith compromise and settlement. The compromise, settlement and releases 

described in the Plan shall be deemed nonseverable from each other and from all other terms of the Plan. 

The Confirmation Order shall constitute the Bankruptcy Court’s approval of the compromise, settlement, 

and releases set forth in the Plan, as well as a finding by the Bankruptcy Court that such settlement and 

compromise, and the releases and indemnities provided to effectuate such settlement, were proposed and 

entered in good faith, are in the best interests of the Debtors, their Estates, and the Holders of Claims and 

Interests, and are fair, equitable, and reasonable. 

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In order to implement the good-faith compromise and settlement set forth herein, the Plan groups 

the Debtors together solely for the purpose of describing treatment of Claims and Interests under the Plan 

and confirmation of the Plan. To the extent there are no Allowed Claims or Interest with respect to a 

particular Debtor, such Class is deemed to be omitted with respect to such Debtor. Except as otherwise 

provided herein, to the extent a holder has a Claim that may be asserted against more than one Debtor, the 

vote of such holder in connection with such Claims shall be counted as a vote of such Claim against each 

Debtor against which such holder has a Claim. The grouping of the Debtors in this manner shall not affect 

any Debtor’s status as a separate legal Entity, change the organizational structure of the Debtors’ business 

enterprise, constitute a change of control of any Debtor for any purpose, cause a merger of consolidation 

of any legal Entities, or cause the transfer of any Assets, and, except as otherwise provided by or 

permitted under the Plan, all Debtors shall continue to exist as separate legal Entities. 

The Debtors determined that prosecution of the various potential claims resolved by the Plan 

could mire the Debtors and other parties in interest in time consuming and expensive litigation, and that 

effectuating a consensual resolution of these matters through the Plan would provide significant value to 

their Estates, in light of the amounts at stake and the complexity, expense, and likely duration of litigation 

related thereto. 

Pursuant to Rule 408 of the Federal Rules of Evidence, the Plan and this Disclosure Statement 

(and any exhibits or supplements relating to the foregoing), and all negotiations relating thereto shall not 

be admissible into evidence in any proceeding unless and until the Plan is consummated, and then only in 

accordance with the Plan. In the event the Plan is not consummated, provisions of the Plan and this 

Disclosure Statement (and any exhibits or supplements relating to the foregoing) and all negotiations 

relating thereto shall not be binding or probative. 

After the Effective Date and without any further notice to or action, order, or approval of the 

Bankruptcy Court, the Reorganized Debtors may compromise and settle, pursuant to Bankruptcy Rule 

9019 and in accordance with the provisions of the Plan, Claims against, and Interests in, the Debtors and 

their Estates, and Causes of Action against other Entities. 

D. Releases 

The Plan contains certain customary debtor and third party releases (as described more fully in 

Article IV.U of this Disclosure Statement). 

Holders of Claims against or Interests in the Debtors who (a) vote in favor of the Plan or (b) do 

not vote in favor of the Plan and do not opt out of the Third Party Release on a timely submitted Ballot or 

Opt Out Form will be deemed to have consented to the release and discharge of all claims and Causes of 

Action against the Released Parties. By opting out of the Third Party Release, such Holder will also 

forgo the benefit of obtaining the releases set forth in Article VIII of the Plan if such party would 

otherwise be a Released Party. 

IV. QUESTIONS AND ANSWERS REGARDING THIS DISCLOSURE STATEMENT AND 

PLAN 

A. What is chapter 11? 

Chapter 11 is the principal business reorganization chapter of the Bankruptcy Code. In addition 

to permitting debtor rehabilitation, chapter 11 promotes equality of treatment for creditors and similarly 

situated interest Holders, subject to the priority of distributions prescribed by the Bankruptcy Code. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 19 of 92
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The commencement of a chapter 11 case creates an estate that comprises all of the legal and 

equitable interests of the debtor as of the date the chapter 11 case is commenced. The Bankruptcy Code 

provides that the debtor may continue to operate its business and remain in possession of its property as a 

“debtor in possession.” 

Consummating a plan is the principal objective of a chapter 11 case. A bankruptcy court’s 

confirmation of a plan binds the debtor, any person acquiring property under the plan, any creditor or 

equity interest holder of the debtor, and any other entity as may be ordered by the bankruptcy court. 

Subject to certain limited exceptions, the order issued by a bankruptcy court confirming a plan provides 

for the treatment of the debtor’s liabilities in accordance with the terms of the confirmed plan. 

B. Why are the Debtors sending me this Disclosure Statement? 

The Debtors are seeking to obtain Bankruptcy Court approval of the Plan. Before soliciting votes 

on the Plan, section 1125 of the Bankruptcy Code requires the Debtors to prepare a disclosure statement 

containing adequate information of a kind, and in sufficient detail, to enable a hypothetical reasonable 

investor to make an informed judgment regarding acceptance of the Plan and to share such disclosure 

statement with all Holders of Claims and Interests whose votes on the Plan are being solicited. This 

Disclosure Statement is being submitted in accordance with these requirements. 

C. Am I entitled to vote on the Plan? 

Your ability to vote on and your distribution under the Plan, if any, depends on what type of 

Claim or Interest you hold. Each category of Holders of Claims or Interests, as set forth in Article III of 

the Plan pursuant to section 1122(a) of the Bankruptcy Code, is referred to as a “Class.” Each Class’s 

respective voting status is set forth below. 

The Plan constitutes a chapter 11 plan of reorganization for the Debtors, which shall include the 

classifications set forth below. Subject to Article I.D of the Plan, to the extent that a Class contains 

Claims or Interests only with respect to one or more particular Debtors, such Class applies solely to such 

Debtor. 

Class Claims and Interests Status Voting Rights 

Class 1 Secured Claims Unimpaired Not Entitled to Vote (Deemed to 

Accept) 

Class 2 Other Priority Claims Unimpaired Not Entitled to Vote (Deemed to 

Accept) 

Class 3 Syndicated Bank Loan Claims Impaired Entitled to Vote 

Class 4 GUC Claims Impaired Entitled to Vote 

Class 5 Convenience Claims Impaired Entitled to Vote 

Class 6 Intercompany Claims Impaired Not Entitled to Vote (Deemed to 

Reject) 

Class 7 Intercompany Interests Unimpaired Not Entitled to Vote (Deemed to 

Accept) 

Class 8 Interests in Cinemex Holdings Impaired Not Entitled to Vote (Deemed to 

Reject) 

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D. What will I receive from the Debtors if the Plan is consummated? 

The table below summarizes the treatment and anticipated recoveries on account of all classified 

Claims against and Interests in, the Debtors under of the Plan. Pursuant to the Plan, the Debtors and the 

Reorganized Debtors, as applicable, reserve the right to object to the amount or classification of any 

Claim under the Plan. A successful objection to a Claim may materially impact the recoveries projected 

below. 

THE PROJECTED RECOVERIES SET FORTH IN THE TABLE BELOW ARE 

ESTIMATES ONLY AND THEREFORE ARE SUBJECT TO CHANGE. FOR A COMPLETE 

DESCRIPTION OF THE DEBTORS’ CLASSIFICATION AND TREATMENT OF CLAIMS 

AND INTERESTS, REFERENCE SHOULD BE MADE TO THE ENTIRE PLAN.2

[table begins on next page] 

 

2

 The recoveries set forth herein may change based upon changes in the amount of Claims that are “Allowed” as 

well as other factors related to the Debtors’ business operations and general economic conditions. “Allowed” 

means, with respect to any Claim or Interest, except as otherwise provided in the Plan: (a) a Claim or Interest in 

a liquidated amount as to which no objection has been Filed prior to the applicable Claims Objection Deadline 

and that is evidenced by a Proof of Claim or Interest, as applicable, timely Filed by the applicable Bar Date or 

that is not required to be evidenced by a Filed Proof of Claim or Interest, as applicable, under the Plan, the 

Bankruptcy Code, or a Final Order; (b) a Claim or Interest that is scheduled by the Debtors as neither Disputed, 

contingent, nor unliquidated, and for which no Proof of Claim or Interest, as applicable, has been timely Filed in 

an unliquidated or a different amount; (c) a Claim or Interest that is upheld or otherwise Allowed (i) pursuant to 

the Plan; (ii) in any stipulation that is approved by the Bankruptcy Court, including a Challenge Resolution 

Stipulation; (iii) pursuant to any contract, instrument, indenture, or other agreement entered into or assumed in 

connection herewith; or (iv) by Final Order (including any such Claim to which the Debtors had objected or 

which the Bankruptcy Court had Disallowed prior to such Final Order); provided that with respect to a Claim or 

Interest described in clauses (a) through (c) above, such Claim or Interest shall be considered Allowed only if 

and to the extent that with respect to such Claim or Interest no objection to the allowance thereof has been or, in 

the Debtors’, Reorganized Debtors’, or GUC Trustee’s reasonable good faith judgment, may be interposed 

within the applicable period of time fixed by the Plan, the Bankruptcy Code, the Bankruptcy Rules, or the 

Bankruptcy Court, or such an objection is so interposed and the Claim or Interest, as applicable, shall have been 

Allowed by a Final Order; provided further that no Claim of any Entity subject to section 502(d) of the 

Bankruptcy Code shall be deemed Allowed unless and until such Entity pays in full the amount that it owes 

such Debtor or Reorganized Debtor, as applicable. Any Claim that has been or is hereafter listed in the 

Schedules as contingent, unliquidated, or Disputed, and for which no Proof of Claim or Interest is or has been 

timely Filed, is not considered Allowed and shall be deemed expunged without further action by the Debtors 

and without further notice to any party or action, approval, or order of the Bankruptcy Court. For the avoidance 

of doubt a Proof of Claim or Interest Filed after the Bar Date shall not be Allowed for any purposes whatsoever 

absent entry of a Final Order allowing such late-Filed Claim. “Allow,” “Allowing,” and “Allowance” shall 

have correlative meanings.

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 21 of 92
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Class Classified 

Claims 

Plan Treatment 

Estimated 

Allowed 

Claims 

Under the 

Amended 

Plan3

Estimated 

% 

Recovery 

Under the 

Amended 

Plan 

Estimated 

% 

Recovery 

Under 

Chapter 74

1 Other Secured 

Claims 

Except to the extent that a Holder of an Allowed 

Other Secured Claim agrees to a less favorable 

treatment of its Allowed Claim, in full and final 

satisfaction, settlement, release, and discharge of 

and in exchange for each Allowed Other Secured 

Claim, each such Holder will receive, at the 

option of the applicable Debtor(s), either: (i) 

payment in full in Cash; (ii) delivery of collateral 

securing any such Claim and payment of any 

interest required under section 506(b) of the 

Bankruptcy Code; (iii) Reinstatement of such 

Claim; or (iv) other treatment rendering such 

Claim Unimpaired. 

$0 100.0% No recovery 

2 Other Priority 

Claims 

Except to the extent that a Holder of an Allowed 

Other Priority Claim agrees to a less favorable 

treatment of its Allowed Claim, in full and final 

satisfaction, settlement, release, and discharge of 

and in exchange for each Allowed Other Priority 

Claim, each such Holder will receive, at the 

option of the applicable Debtor(s), either: (i) 

payment in full in Cash; or (ii) other treatment 

rendering such Claim Unimpaired or otherwise 

permitted by the Bankruptcy Code. 

$0 100.0% No Recovery 

3 

Syndicated 

Bank Loan 

Claims

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. 

Except to the extent that a Holder of an Allowed 

Syndicated Bank Loan Claim agrees to less 

favorable treatment of its Allowed Claim, in full 

and final satisfaction, settlement, release, and 

discharge of and in exchange for each Allowed 

Syndicated Bank Loan Claim, each such Holder 

will receive its Pro Rata share of the Syndicated 

Bank Loan Claims Allocation. 

$159.1 

million 0.6% No recovery 

 

3

 The Debtors estimate that aggregate claims total for certain classes, including Class 4, will be substantially 

higher in a liquidation, as all unexpired leases and executory contracts would be rejected and treated within this 

class, as set forth in the Liquidation Analysis attached hereto as Exhibit D. 

4

 Recoveries are based on the Liquidation Analysis attached hereto as Exhibit D. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 22 of 92
 12 

Class Classified 

Claims 

Plan Treatment 

Estimated 

Allowed 

Claims 

Under the 

Amended 

Plan3

Estimated 

% 

Recovery 

Under the 

Amended 

Plan 

Estimated 

% 

Recovery 

Under 

Chapter 74

4 GUC Claims 

Holders of Allowed 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). 

$50-60 

million 

11.4%-

15.3% No recovery 

5 Convenience 

Claims 

Claimants with Allowed Convenience Claims that 

are $15,000 or less or that elect to reduce their 

Allowed Claims to $15,000 will receive 12% of 

such Allowed Claims in cash on the Effective 

Date. 

$1.13 

million 12.0% No recovery 

6 Intercompany 

Claims 

Intercompany Claims will be canceled, 

discharged, released, and extinguished in full as 

of the Effective Date.

$61.9 

million 

No 

recovery No recovery 

7 Intercompany 

Interests 

Intercompany Interests will be Reinstated as of 

the Effective Date. n/a n/a n/a 

8 

Interests in 

Cinemex 

Holdings 

On the Effective Date, existing 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. 

$0.0 0.0% 0.0% 

E. What will I receive under the Plan if I hold an Allowed Administrative Claim, 

Professional Fee Claim, Priority Tax Claim, or DIP Loan Claim? 

In accordance with section 1123(a)(1) of the Bankruptcy Code, Administrative Claims, DIP Loan 

Claims, Priority Tax Claims, and Professional Fee Claims have not been classified and, thus, are excluded 

from the Classes of Claims and Interests set forth in Article III of the Plan. 

The Debtors estimate that Allowed Administrative Claims will total approximately $11.3 million 

excluding administrative rent that may be owed in respect of rejected leases (a potential liability that the 

Debtors estimate to be approximately $1.3 million). Administrative rent under leases to be assumed will 

be paid as cure costs by the Purchaser pursuant to Bankruptcy Code section 365. The Debtors further 

estimate that there will be Allowed Other Priority Claims aggregating approximately $0. The Debtors’ 

estimates are the result of the Debtors’ and their advisors’ careful analysis of available information, 

including the Debtors’ books and records and an analysis of the validity of the Claims asserted against the 

Debtors. The actual amount of Allowed Administrative Claims and Other Priority Claims is subject to 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 23 of 92
 13 

numerous contingencies, including the outcome of pending litigation. Nonetheless, the Debtors have 

determined that there will be sufficient value to satisfy Allowed Other Secured Claims in full or otherwise 

render such claims unimpaired under the Plan. 

1. Administrative Claims 

(a) General Administrative Claims 

General Administrative Claims will be satisfied as set forth in Article II.A of the Plan, as 

summarized herein. Each Holder of an Allowed General Administrative Claim will receive, in full 

satisfaction of its General Administrative Claim, Cash equal to the amount of such Allowed General 

Administrative Claim either: (a) on the Effective Date; (b) if the General Administrative Claim is not 

Allowed as of the Effective Date, sixty (60) days after the date on which an order allowing such General 

Administrative Claim becomes a Final Order, or as soon thereafter as reasonably practicable; or (c) if the 

Allowed General Administrative Claim is based on a liability incurred by the Debtors in the ordinary 

course of their business after the Petition Date, pursuant to the terms and conditions of the particular 

transaction or agreement giving rise to such Allowed General Administrative Claim, without any further 

action by the Holders of such Allowed General Administrative Claim, and without any further notice to or 

action, order, or approval of the Bankruptcy Court. 

(b) Professional Compensation 

Professional Fee Claims will be satisfied as set forth in Article II.A of the Plan, as summarized 

herein. The amount of Professional Fee Claims owing to the Professionals will be paid in Cash to such 

Professionals by the Reorganized Debtors from the Professional Fee Escrow Account as soon as 

reasonably practicable after such Professional Fee Claims are Allowed by a Final Order. When all such 

Allowed amounts owing to Professionals have been paid in full, any remaining amount in the 

Professional Fee Escrow Account will promptly be paid to the Reorganized Debtors without any further 

action or order of the Bankruptcy Court. If the Professional Fee Escrow Account is insufficient to fund 

the full Allowed amounts of Professional Fee Claims, remaining unpaid Allowed Professional Fee Claims 

will be paid by the Debtors or the Reorganized Debtors. 

2. Priority Tax Claims 

The Debtors estimate that Allowed Priority Tax Claims will total approximately $0. Priority Tax 

Claims will be satisfied as set forth in Article II.B of the Plan and summarized herein. Except to the 

extent that a Holder of an Allowed Priority Tax Claim agrees to a less favorable treatment, in full and 

final satisfaction, settlement, release, and discharge of and in exchange for each Allowed Priority Tax 

Claim, each Holder of such Allowed Priority Tax Claim will be treated in accordance with the terms set 

forth in section 1129(a)(9)(C) of the Bankruptcy Code and, for the avoidance of doubt, Holders of 

Allowed Priority Tax Claims will receive interest on such Allowed Priority Tax Claims after the Effective 

Date in accordance with sections 511 and 1129(a)(9)(C) of the Bankruptcy Code. In the event an 

Allowed Priority Tax Claim is also a Secured Tax Claim, such Claim will, to the extent it is Allowed, be 

treated in accordance with the terms set forth in section 1129(a)(9)(D) of the Bankruptcy Code and, if 

such Claim is not otherwise paid in full, as an Other Secured Claim. 

3. DIP Loan Claims 

DIP Loan Claims will be satisfied as set forth in Article II.C of the Plan and summarized herein. 

As of September 24, 2020, the aggregate Allowed DIP Loan Claims totaled $11.6 million. As of the date 

of this Disclosure Statement, the Debtors anticipate seeking approval of additional postpetition financing 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 24 of 92
 14 

in the aggregate amount of approximately $8.3 million to fund these Chapter 11 Cases through the 

Effective Date. 

Except to the extent that a Holder of an Allowed DIP Loan Claim agrees to a less favorable 

treatment, in full and final satisfaction, settlement, release, and discharge of and in exchange for each 

Allowed DIP Loan Claim, each Holder of an Allowed DIP Loan Claim will be paid in full in Cash from 

the proceeds of the Sale Transaction. Upon the payment or satisfaction of the Allowed DIP Loan Claims, 

all superpriority claims granted to Holders of Allowed DIP Loan Claims will be automatically discharged 

and released and of no further force and effect without any further notice to or action, order, or approval 

of the Bankruptcy Court or any other Entity. 

F. What happens to my recovery if the Plan is not confirmed or does not go effective? 

In the event that the Plan is not confirmed or does not go effective, there is no assurance that the 

Debtors will be able to reorganize their business. It is possible that any alternative may provide Holders 

of Claims and Interests with less than they would have received pursuant to the Plan. For a more detailed 

description of the consequences of an extended chapter 11 case, or of a liquidation scenario, see

Article X.B of this Disclosure Statement, entitled “Best Interests of Creditors/Liquidation Analysis” and 

the Liquidation Analysis attached hereto as Exhibit D. 

G. What are the sources of Cash and other consideration required to fund the Plan? 

The Debtors will fund distributions under the Plan with, as applicable: (1) Cash on hand 

(including Cash derived from the Stock Purchase Agreement); and (2) the TLCF Note. 

H. Are there any regulatory approvals required to consummate the Plan? 

No. There are no known regulatory approvals that are required to consummate the Plan. 

I. Are there risks to owning the New Common Stock upon emergence from 

chapter 11? 

Yes. See Article VIII of this Disclosure Statement, entitled “RISK FACTORS,” which begins on 

page [[39]]. 

J. Is there potential litigation related to the Plan? 

Parties in interest may object to the approval of this Disclosure Statement and may object to 

Confirmation of the Plan as well, which objections potentially could give rise to litigation. See Article 

VIII.C.5 of this Disclosure Statement, entitled “The Reorganized Debtors May Be Adversely Affected by 

Potential Litigation, Including Litigation Arising Out of the Chapter 11 Cases,” which begins on page 49. 

In the event that it becomes necessary to confirm the Plan over the objection of certain Classes, 

the Debtors may seek confirmation of the Plan notwithstanding the dissent of such objecting Classes. The 

Bankruptcy Court may confirm the Plan pursuant to the “cramdown” provisions of the Bankruptcy Code, 

which allow the Bankruptcy Court to confirm a plan that has been rejected by an impaired Class if it 

determines that the Plan satisfies section 1129(b) of the Bankruptcy Code. See Article VIII.A.4 of this 

Disclosure Statement, entitled “The Debtors May Not Be Able to Secure Confirmation of the Plan,” 

which begins on page 43. 

The Reorganized Debtors will have sole power and authority to investigate, prosecute, settle, 

release or otherwise liquidate, compromise, or resolve the Causes of Action. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 25 of 92
 15 

K. Will any party have significant influence over the corporate governance and 

operations of the Debtors following consummation of the Plan? 

Subject to approval by a purchaser of the New Common Stock, as of the Effective Date, the 

Debtors anticipate that the initial Reorganized Cinemex Holdings Board will consist of three directors 

chosen by the Debtors and one Board observer chosen by the Trustee of the GUC Claims Trust or the 

Committee. The identities of the directors and the board observer will be disclosed in the Plan 

Supplement. As of the Effective Date, the terms of the current members of the boards of directors or 

managers, as applicable, of each of the Debtors shall expire, and the initial Reorganized Cinemex 

Holdings Board and the boards of directors or managers of each of the other Reorganized Debtors will 

include those directors and officers set forth in the lists of directors and officers of the Reorganized 

Debtors included in the Plan Supplement. 

After the Effective Date, the officers of each of the Reorganized Debtors will be appointed in 

accordance with the respective New Organizational Documents. Pursuant to section 1129(a)(5) of the 

Bankruptcy Code, the Debtors will disclose in the Plan Supplement the identity and affiliations of each 

person proposed to be an officer, Board observer or to serve on the initial board of directors of any of the 

Reorganized Debtors. To the extent any such officer or director of the Reorganized Debtors is an 

“insider” under the Bankruptcy Code, the Debtors also will disclose the nature of any compensation to be 

paid to such officer. Each such officer will serve from and after the Effective Date pursuant to the terms 

of the New Organizational Documents and the Governance Term Sheet that will be included in the Plan 

Supplement. 

Until the TLCF Note is satisfied in full by its terms, Board meetings shall be held no less than 

quarterly, and the Committee or the GUC Claims Trustee shall have the right to appoint a Board observer 

as a non-voting member of the Reorganized Cinemex Board (and all subcommittees, special committees, 

or other groups established by the Reorganized Cinemex Board) and shall receive any and all information 

provided to any member of the Reorganized Cinemex Board and shall be required to keep all such 

information confidential. Notwithstanding the foregoing, the Board observer appointed by the Committee 

or the GUC Claims Trustee need not be permitted to attend any portion of any such meeting of the 

Cinemex Board or be provided with any portion of such materials to the extent that so doing would result 

in a waiver of any legal privilege, including the attorney-client privilege. Prior to excluding the observer 

from any meeting of the Reorganized Cinemex Board or withholding any information made available to 

the Board on the ground that to do so would waive a privilege, Reorganized Cinemex and the observer 

shall use best efforts, including executing common interest and confidentiality agreements mutually 

acceptable to Reorganized Cinemex and the observer, to allow the observer to attend the meeting of the 

Board and to have access to the information provided. In addition, the Reorganized Cinemex 

management shall meet with the Board observer once a month to discuss operations and financial 

performance. 

L. What is the Management Incentive Plan and how will it affect the distribution I 

receive under the Plan? 

After the Effective Date, the Reorganized Cinemex Holdings Board may adopt and implement a 

Management Incentive Plan pursuant to which management and key employees will receive a percentage 

of equity in Reorganized Cinemex Holdings, comprised of New Common Stock. The participants in the 

Management Incentive Plan, the timing and allocations of the awards to participants, and the other terms 

and conditions of such awards (including, but limited to, vesting, exercise prices, base values, hurdles, 

forfeiture, repurchase rights, and transferability) will be determined by the Reorganized Cinemex 

Holdings Board. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 26 of 92
 16 

M. Will operation of the Debtors’ theaters be affected by the Plan? 

The Debtors believe the Plan provides the best alternative for the Debtors to restructure and 

operate their theaters. The Plan provides for the treatment of all Claims against the Debtors’ estates and 

the assumption and rejection of certain Unexpired Leases and Executory Contracts. The Debtors believe 

the Plan will enable them to successfully restructure their financial obligations, and will permit the 

Debtors to operate their theaters in substantially the same manner as they did prior to the Petition Date, 

subject to applicable COVID-19 laws and regulations. 

N. What will happen to Executory Contracts and Unexpired Leases under the Plan? 

On the Effective Date, except as otherwise provided in the Plan, any Executory Contract or 

Unexpired Lease of the Debtors is deemed to be an Assumed Executory Contract or Unexpired Lease, in 

accordance with the provisions and requirements of sections 365 and 1123 of the Bankruptcy Code, other 

than those Executory Contracts or Unexpired Leases that: (1) previously were assumed, assumed and 

assigned, or rejected by the Debtors; (2) are identified on the Rejected Executory Contract and Unexpired 

Lease List; or (3) are the subject of a motion to reject Executory Contracts or Unexpired Leases that is 

pending on the Confirmation Date. 

Any monetary defaults under each Assumed Executory Contract or Assumed Unexpired Lease 

will be satisfied, pursuant to section 365(b)(1) of the Bankruptcy Code, by payment of the default amount 

in Cash on the Effective Date, or as soon as reasonably practicable thereafter or on such other terms as the 

parties to such Executory Contracts or Unexpired Leases may otherwise agree. To the extent the Plan 

implements a Sale Transaction, the Purchaser shall pay the Cure Costs5

 associated with each Assumed 

Executory Contract or Unexpired Lease that is assumed under the Plan. In the event of a dispute 

regarding (1) the amount of any payments to cure such a default, (2) the ability of the Reorganized 

Debtors or any assignee to provide “adequate assurance of future performance” (within the meaning of 

section 365 of the Bankruptcy Code) under the Executory Contract or Unexpired Lease to be assumed, or 

(3) any other matter pertaining to assumption, the cure payments required by section 365(b)(1) of the 

Bankruptcy Code will be made following the entry of a Final Order resolving the dispute and approving 

the assumption. 

The Plan Supplement will include the Assumed Executory Contract and Unexpired Lease List 

and Rejected Executory Contract and Unexpired Lease List. Any objection by a contract or lease 

counterparty to a proposed rejection or assumption of an executory contract or unexpired lease or the 

related cure cost, other than an objection based on the Auction, the proposed assignee(s), or as to the 

ability of the assignee to provide “adequate assurance of future performance” (within the meaning of 

section 365 of the Bankruptcy Code) (each, a “Contract Objection”) must be filed by the date set by the 

Court for objecting to the Plan. Solely to the extent of (i) any modification to the Assumed Executory 

Contract and Unexpired Lease List or Rejected Executory Contract and Unexpired Lease List as 

compared to the notices previously Filed by the Debtors (ECF Nos. 537, 557, 703, 729, 730, 731) and 

(ii) any objection by a contract or lease counterparty to the Auction, the proposed assignee(s), or the 

ability of the assignee to provide “adequate assurance of future performance,” the deadline for any 

objection with regard to any such proposed rejection or assumption and assignment shall be the 

Confirmation Objection Deadline. For the avoidance of doubt, to the extent an Executory Contract or 

Unexpired Lease proposed to be assumed is not listed as having a related cure cost, any counterparty to 

 

5

 As used herein, “Cure Costs” has the meaning set forth in Annex 3 to the Corrected Order Establishing 

Bidding Procedures Relating to the Sales of All of a Portion of the Debtors’ Assets (ECF No. 522). The amount of 

such Cure Costs is provided in the various notices Filed by the Debtors in the Chapter 11 Cases (ECF Nos. 537, 557, 

703, 729, 730, 731), and may be supplemented in the Plan Supplement to be filed prior to the Confirmation Hearing. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 27 of 92
 17 

such Executory Contract or Unexpired Lease that fails to object timely to the proposed assumption will 

be deemed to have consented to such assumption and deemed to release any Claim or Cause of Action 

for any monetary defaults under such Executory Contract or Unexpired Lease. 

 For the avoidance of doubt, the Debtors or the Reorganized Debtors, as applicable, may add any 

Executory Contract or Unexpired Lease proposed to be assumed to the Rejected Executory Contracts and 

Unexpired Lease List in accordance with the time limits provided by the Plan for any reason, including if 

the Bankruptcy Court determines that the Allowed Cure Claim with respect to any Executory Contract or 

Unexpired Lease is greater than the amount set forth in the applicable cure notice or the Plan, in which 

case such Executory Contract or Unexpired Lease is deemed rejected as the Effective Date. 

 All Allowed Claims arising from the modification of the Rejected Executory Contract and 

Unexpired Lease List will be classified as GUC Claims and will be treated in accordance with the Plan, 

unless a different security or priority is otherwise asserted in such Proof of Claim and Allowed in 

accordance with the Plan. 

Contracts and leases entered into after the Petition Date by any Debtor, including any Executory 

Contracts and Unexpired Leases assumed by such Debtor, will be performed by the applicable Debtor or 

the Reorganized Debtor, and such entity will be liable thereunder in the ordinary course of its business. 

Accordingly, such contracts and leases (including any assumed Executory Contracts and Unexpired 

Leases) that have not been rejected as of the date of Confirmation will survive and remain unaffected by 

entry of the Confirmation Order. 

O. What will happen to Insurance Policies under the Plan? 

As set forth in Article V.F of the Plan, on the Effective Date each of the Debtors’ Insurance 

Policies shall be deemed assumed by the applicable Reorganized Debtor pursuant to sections 105 and 365 

of the Bankruptcy Code as though listed on the Assumed Executory Contract and Unexpired Lease List 

and such Insurance Policies will not be impaired in any way by the Plan or Confirmation Order. 

P. Are the Debtors assuming any indemnification obligations for their current officers 

and directors under the Plan? 

As set forth in Article V.E of the Plan, the Debtors and the Reorganized Debtors shall assume the 

Indemnification Obligations for the current and former directors, officers, managers, employees, and 

other professionals and advisors of the Debtors, to the extent consistent with applicable law, and such 

Indemnification Obligations shall not be modified, reduced, discharged, impaired, or otherwise affected in 

any way, and shall survive Unimpaired and unaffected, irrespective of when such obligation arose. 

Notwithstanding the foregoing, nothing shall impair the ability of Reorganized Debtors to modify 

Indemnification Obligations (whether in the bylaws, certificates or incorporate or formation, limited 

liability company agreements, other organizational or formation documents, board resolutions, 

indemnification agreements, employment contracts, or otherwise) arising after the Effective Date; 

provided that none of the Reorganized Debtors shall amend or restate any of the New Organizational 

Documents before the Effective Date to terminate or adversely affect any of the Reorganized Debtors’ 

Indemnification Obligations. 

Q. How will the preservation of the Causes of Action impact my recovery under the 

Plan? 

The Plan provides for the retention of all Causes of Action other than those that are expressly 

waived, relinquished, exculpated, released, compromised, or settled. The Schedule of Retained Causes of 

Action shall be set forth in the Plan Supplement, in accordance with the Plan. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 28 of 92
 18 

The Schedule of Retained Causes of Action shall specify which Causes of Action shall be 

retained by the Reorganized Debtors. Any proceeds from the Retained Causes of Action will be retained 

by the Reorganized Debtors, and the projected recovery from the Retained Causes of Action is not 

anticipated to be substantial. 

 As set forth in Article IV.U of the Plan, in accordance with section 1123(b) of the Bankruptcy 

Code, the Reorganized Debtors shall retain and may enforce all rights to commence and pursue any and 

all Causes of Action belonging to the Debtors, whether arising before or after the Petition Date, including, 

without limitation, any actions specifically enumerated in the Schedule of Retained Causes of Action, and 

the Reorganized Debtors’ rights to commence, prosecute, or settle such Causes of Action shall be 

preserved notwithstanding the occurrence of the Effective Date, other than Causes of Action released by 

the Debtors pursuant to the releases and exculpations contained in the Plan, including in Article VIII of 

the Plan, or otherwise under the Plan, including the Avoidance Action Waiver in favor of GUC Claims 

and the Syndicated Bank Loan Claims, which shall be deemed released and waived by the Debtors and 

the Reorganized Debtors, as applicable, as of the Effective Date. 

The Reorganized Debtors may pursue such Causes of Action, as appropriate, in accordance with 

the best interests of the Reorganized Debtors. No Entity may rely on the absence of a specific 

reference in the Plan, the Plan Supplement, the Disclosure Statement, or the Schedule of Retained 

Causes of Action to any Cause of Action against it as any indication that the Debtors, the 

Reorganized Debtors, as applicable, will not pursue any and all available Causes of Action of the 

Debtors against it. The Debtors and the Reorganized Debtors expressly reserve all rights to 

prosecute any and all Causes of Action against any Entity, except as otherwise provided in the Plan, 

including Article VIII of the Plan. Unless any Cause of Action of the Debtors against an Entity is 

expressly waived, relinquished, exculpated, released, compromised, or settled in the Plan or pursuant to a 

Final Order, the Debtors and the Reorganized Debtors expressly reserve all such Causes of Action for 

later adjudication, and, therefore, no preclusion doctrine, including the doctrines of res judicata, collateral 

estoppel, issue preclusion, claim preclusion, estoppel (judicial, equitable, or otherwise), or laches, shall 

apply to such Causes of Action upon, after, or as a consequence of Confirmation or Consummation. 

The Reorganized Debtors, as applicable, reserve and shall retain such Causes of Action of the 

Debtors notwithstanding the rejection or repudiation of any Executory Contract or Unexpired Lease 

during the Chapter 11 Cases or pursuant to the Plan. In accordance with section 1123(b)(3) of the 

Bankruptcy Code, any Cause of Action that a Debtor may hold against any Entity shall vest in the 

applicable Reorganized Debtor, except as otherwise provided in the Plan, including Article VIII of the 

Plan and the Avoidance Action Waiver. The Reorganized Debtors, through their authorized agents or 

representatives, shall retain and may exclusively enforce any and all such Causes of Action. The 

Reorganized Debtors shall have the exclusive right, authority, and discretion to determine and to initiate, 

file, prosecute, enforce, abandon, settle, compromise, release, withdraw, or litigate to judgment any such 

Causes of Action (except as otherwise provided in the Plan), or to decline to do any of the foregoing, 

without the consent or approval of any third party or any further notice to or action, order, or approval of 

the Bankruptcy Court. 

1. What Causes of Action are not being preserved? 

Any and all claims and Causes of Action that the Debtors could assert against any Released Party 

are being released pursuant to the Plan and shall not be preserved for prosecution. In addition, the Plan 

contains an Avoidance Action Waiver. The Avoidance Action Waiver means that although the 

Bankruptcy Code allows for the Reorganized Debtors to pursue causes of action for preferences, 

fraudulent transfers and other actions against creditors that received payments or transfers before the 

bankruptcy, the Debtors and the Committee determined that those claims would not yield a net material 

benefit to the creditors or the Debtors in addition to the settlements embodied in the Plan. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 29 of 92
 19 

R. What might affect the recovery to Holders of Allowed GUC Claims? 

Each Holders of Allowed GUC Claims will receive the GUC Claims Trust Interest that shall 

entitle such Holder to its Pro Rata share of the GUC Claims Trust Net Assets; 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. The actual distribution to a Holder of an Allowed GUC Claim may vary depending 

on the allowance or disallowance of GUC Claims asserted against the Debtors’ estates, and the amount of 

claims that are treated as Allowed Convenience Claims. In addition, the value of the TLCF Note whose 

proceeds will be paid to the GUC Claims Trust is based on a percentage of the Reorganized Debtors’ 

Theater Level Cash Flow in 2021, 2022, and 2023. These cash flows have been estimated by the Debtors, 

however they are inherently subject to significant variability based on factors related to Covid, the 

Debtors’ business operations, the quality of films released, consumer preferences, and other factors. The 

actual amounts recovered under the TLCF Note are subject to material change and may differ 

significantly from current projections. 

1. How will the final amount of Allowed GUC Claims affect the recovery of 

Holders of Allowed GUC Claims under the Plan? 

The Debtors estimate the amount of Allowed GUC Claims against all Debtors will be 

approximately $52.3 million. The Debtors’ estimate for the Allowed GUC Claims is materially lower 

than the value of all GUC Claims asserted against the Debtors. The estimate of Allowed GUC Claims is 

the result of the Debtors’ and their advisors’ careful analysis of available information, including the 

Debtors’ books and records and an analysis of the validity of the GUC Claims asserted against the 

Debtors. As part of their analysis, the Debtors and their advisors determined that certain of the GUC 

Claims that have been asserted should not be Allowed GUC Claims for various reasons, including that 

such GUC Claims have been satisfied during these Chapter 11 Cases, are duplicative, or are not properly 

asserted against the applicable Debtor, among others. 

The Debtors’ estimate of Allowed GUC Claims, and the corresponding ranges of potential 

recoveries resulting therefrom, depends on a number of contingencies, including, among others: 

(a) the determination to be made by the Debtors regarding the assumption and rejection of Executory 

Contracts and Unexpired Leases; (b) the amount of Claims from the rejection of such Executory 

Contracts and Unexpired Leases; (c) the amount of Claims Filed by Governmental Units; (d) Claims 

arising from litigation against the Debtors; and (e) the Claims reconciliation process. 

Although the estimate of Allowed GUC Claims is the result of the Debtors’ and their advisors’ 

careful evaluation of available information, the ultimate amount of Allowed GUC Claims may be higher 

or lower than the Debtors’ estimate provided herein, which difference could be material. 

2. How will the Debtor against which an Allowed GUC Claim is Allowed affect 

the recovery of Holders of Allowed GUC Claims under the Plan? 

Each Holder of Allowed GUC Claims will receive its Pro Rata share of the GUC Claims Trust 

Net Assets; 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. Based upon the settlement and 

compromise contained in the Plan, including the treatment of Intercompany Claims, the recoveries to 

Holders of Allowed GUC Claims should not vary by the Debtor against which such Claims are asserted. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 30 of 92
 20 

3. How will Claims asserted with respect to rejection damages affect the 

recovery of Holders of Allowed GUC Claims under the Plan? 

The Debtors currently estimate that Claims arising from the Debtors’ rejection of Executory 

Contracts and Unexpired Leases total approximately $21.9 million in the aggregate. This estimate takes 

into account large claims that are subject to potential settlement. If the settlements are not approved by 

the Bankruptcy Court, the actual amount of Claims arising from rejection of Executory Contracts and 

Unexpired Leases could be materially greater than the Debtors’ estimates. All Allowed Claims arising 

from the rejection of the Debtors’ Executory Contracts or Unexpired Leases shall be classified as GUC 

Claims against the applicable Debtor and shall be treated in accordance with the Plan, unless a different 

security or priority is otherwise asserted in such Proof of Claim and Allowed in accordance with Article 

VII of the Plan. Accordingly, to the extent that the actual amount of GUC Claims on account of rejection 

damages Claims changes, the value of recoveries to Holders of Claims in Class 4 could change as well, 

and such changes could be material. Similarly, as set forth in the Liquidation Analysis, if the Plan is not 

confirmed and the Debtors’ estates are liquidated, the Debtors anticipate that the amount of rejection 

damages claims would increase significantly as all unexpired leases and executory contracts would be 

rejected. 

4. How will the resolution of certain contingent, unliquidated, and disputed 

litigation Claims affect the recovery of Holders of Allowed GUC Claims 

under the Plan? 

The Debtors’ estimates of Allowed GUC Claims are based on reasonable estimates of certain 

contingent, unliquidated, and disputed litigation Claims known to the Debtors as of the date hereof, which 

generally are considered Unsecured Claims. The actual amount of Allowed GUC Claims could range 

based on certain contingent, unliquidated, and disputed litigation Claims, some of which were known to 

the Debtors as of the date hereof, which generally are considered Unsecured Claims. 

As of the Petition Date, the Debtors were parties to certain litigation matters that arose in the 

ordinary course of operating their business and could become parties to additional litigation in the future 

as a result of conduct that occurred prior to the Petition Date. Certain of these litigation matters are set 

forth more fully in section VII of this Disclosure Statement. Although the Debtors have disputed, are 

disputing, or will dispute in the future the amounts asserted by such litigation counterparties, to the extent 

these parties are ultimately entitled to a higher amount than is reflected in the amounts estimated by the 

Debtors herein, the value of recoveries to Holders of Claims in Class 4 could change as well, and such 

changes could be material. 

S. If the Plan provides that I get a distribution, do I get it upon Confirmation, when 

the Plan goes effective, or on the Distribution Dates? What is meant by 

“Confirmation,” “Effective Date,” and “Consummation?” 

“Confirmation” of the Plan refers to approval of the Plan by the Bankruptcy Court. Confirmation 

of the Plan does not guarantee that you will receive the distribution indicated under the Plan. After 

Confirmation of the Plan by the Bankruptcy Court, there are conditions that need to be satisfied or waived 

so that the Plan can go effective. See Article X of this Disclosure Statement, entitled “Confirmation of 

the Plan” for a discussion of the conditions precedent to consummation and effectiveness of the Plan. 

Unless otherwise provided in the Plan, on the Distribution Date (or if a Claim is not an Allowed 

Claim on the Distribution Date, on the date that such Claim or Interest becomes an Allowed Claim, or as 

soon as reasonably practicable thereafter), each Holder of an Allowed Claim shall receive the full amount 

of the distributions that the Plan provides for such Allowed Claim in accordance with its priority and 

Allowed amount. No interest shall accrue on any Claims from and after the Effective Date. No Holder of 

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a Claim shall recover more than 100 percent of the Allowed amount of such Claim. Notwithstanding 

anything to the contrary in the Plan, all distributions on account of Syndicated Bank Loan Claims shall be 

made by wire transfer to the Syndicated Bank Loan Agent, who shall be deemed to be the Holder of such 

Syndicated Bank Loan Claims, as applicable, for purposes of distributions to be made under the Plan. As 

soon as practicable following compliance with the requirements set forth in Article VI of the Plan, the 

Syndicated Bank Loan Agent shall arrange to deliver or direct the delivery of such distributions to or on 

behalf of the Holders of the Syndicated Bank Loan Claims as reflected on the Syndicated Bank Loan 

Agent’s records at the time in accordance with the terms of the Syndicated Bank Loan Credit Agreement, 

subject to any modifications to such distributions in accordance with the terms of the Plan; provided, 

however, that the Syndicated Bank Loan Agent shall retain all rights as administrative agent under the 

Syndicated Bank Loan Credit Agreement in connection with the delivery of distributions to Syndicated 

Bank Loan Lenders. Notwithstanding anything in the Plan to the contrary, and without limiting the 

release provisions of the Plan, the Syndicated Bank Loan Agent shall not have any liability to any person 

with respect to distributions made or directed to be made by the Syndicated Bank Loan Agent. 

If and to the extent that there are Disputed Claims, distributions on account of any such Disputed 

Claims shall be made pursuant to the provisions set forth in Article VII of the Plan. 

To the extent any distributions made in accordance with the Plan are subject to disgorgement to 

the Reorganized Debtors or the GUC Claims Trust, as applicable, the Reorganized Debtors or the GUC 

Claims Trust, as applicable, shall effectuate the distribution of such disgorged distribution to the Holders 

of Allowed Claims entitled to such distributions in accordance with the Plan as soon as reasonably 

practicable. For the avoidance of doubt, to the extent disgorgement of a distribution made to a Holder of 

a Claim pursuant to the Plan is required, such Holder shall be required to disgorge any distribution but 

shall not be required to remit interest on such distribution. 

T. What happens to contingent, unliquidated, and disputed Claims under the Plan? 

As set forth in more detail in Article VII of the Plan, subject to the rights and duties of the 

applicable Reorganized Debtor(s) or the GUC Trustee, after the Effective Date, (a) the applicable 

Reorganized Debtor(s) or the GUC Trustee shall have the sole authority to File, withdraw, or litigate to 

judgment, objections to all other Claims; (b) the applicable Reorganized Debtor(s) or GUC Trustee shall 

have the authority to settle or compromise any Disputed Claim without any further notice to or action, 

order, or approval by the Bankruptcy Court; and (c) the Reorganized Debtors or the GUC Trustee as 

applicable shall have the authority to administer and adjust the Claims Register to reflect any such 

settlements or compromises without any further notice to or action, order, or approval by the Bankruptcy 

Court. 

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Before or after the Effective Date, the Debtors. the Reorganized Debtors, or the GUC Trustee as 

applicable, may (but are not required to) at any time request that the Bankruptcy Court estimate any 

Disputed Claim that is contingent or unliquidated pursuant to section 502(c) of the Bankruptcy Code for 

any reason, regardless of whether any party previously has objected to such Claim or whether the 

Bankruptcy Court has ruled on any such objection, and the Bankruptcy Court shall retain jurisdiction 

under 28 U.S.C. § 1334 to estimate any such Claim, including during the litigation of any objection to any 

Claim or during the appeal relating to such objection. Notwithstanding any provision to the contrary in 

the Plan, a Claim that has been Disallowed or expunged from the Claims Register, but that either is 

subject to appeal or has not been the subject of a Final Order, shall be deemed to be estimated at zero 

dollars, unless otherwise ordered by the Bankruptcy Court. In the event that the Bankruptcy Court 

estimates any contingent or unliquidated Claim, that estimated amount shall constitute a maximum 

limitation on such Claim for all purposes under the Plan (including for purposes of distributions), and the 

Reorganized Debtors may elect to pursue any supplemental proceedings to object to any ultimate 

distribution on such Claim. 

Notwithstanding section 502(j) of the Bankruptcy Code, in no event shall any Holder of a Claim 

that has been estimated pursuant to section 502(c) of the Bankruptcy Code or otherwise be entitled to seek 

reconsideration of such estimation unless such Holder has Filed a motion requesting the right to seek such 

reconsideration on or before seven (7) days after the date on which such Claim is estimated. Each of the 

foregoing Claims and objection, estimation, and resolution procedures are cumulative and not exclusive 

of one another. Claims may be estimated and subsequently compromised, settled, withdrawn, or resolved 

by any mechanism approved by the Bankruptcy Court. 

On or after the Effective Date, the Reorganized Debtors shall establish one or more reserves for 

Claims that are contingent or have not yet been Allowed, in an amount or amounts as reasonably 

determined by the Reorganized Debtors, consistent with the Proof of Claim Filed by the applicable 

Holder of such Disputed Claim. 

U. Will there be releases and exculpation granted to parties in interest as part of the 

Plan? 

Yes, to effectuate the settlements reached with these parties, the Plan includes releases by the 

Debtors (the “Debtors’ Releases”) and the Third Party Release, an exculpation provision, and an 

injunction provision. The Plan provides for releases for (a) the DIP Lenders; (b) the Committee; (c) the 

individual members of the Committee (both in their capacity as such and as individual creditors); (d) the 

Syndicated Bank Loan Agent; (e) each of the Syndicated Bank Loan Lenders; (f) each of the Debtors’ 

current and former directors or officers; and (g) with respect to each of the foregoing (a) through (f), each 

of such Entity and its current and former Affiliates, and such Entities’ and their current and former 

Affiliates’ current and former members, directors, managers, officers, equity holders (regardless of 

whether such interests are held directly or indirectly), predecessors, successors, and assigns, subsidiaries, 

and each of their respective current and former members, equity holders, officers, directors, managers, 

principals, members, employees, agents, advisory board members, financial advisors, partners, attorneys, 

accountants, investment bankers, consultants, representatives, and other professionals, each in their 

capacity as such; provided that any Holder of a Claim or Interest that votes against or objects to the Plan 

or opts out of the Third Party Release shall not be a Released Party. In addition, notwithstanding 

anything to the contrary in the Plan, Plan Supplement or Confirmation Order, in no event shall any of the 

Syndicated Bank Loan Lenders or the Syndicated Bank Loan Agent (regardless of whether they have 

opted out of the releases or otherwise) be deemed to have released or discharged any claims they may 

have against Grupo Cinemex, Operadora De Cinemas, S.A. DE C.V. or any other non-Debtor Entity 

arising under or related to the Syndicated Bank Loan Credit Agreement and related documentation, and in 

no event shall any holder of a GUC Claim based on or arising from a contractual obligation, the liability 

for which is subject to a guarantee or payment assurance by Grupo Cinemex, Operadora De Cinemas, 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 33 of 92
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S.A. DE C.V. or any other non-Debtor Entity, be deemed to have released or discharged any claims or 

causes of action they may have against Grupo Cinemex, Operadora De Cinemas, S.A. DE C.V. or any 

other non-Debtor Entity arising under or related to such contract, whether or not rejected prior to the 

Confirmation Date and whether or not such non-Debtor Entity opts out of the Releases on their respective 

Ballot. 

Importantly, each Holder of a Claim or Interest who either (a) votes in favor of the Plan or 

(b) is not entitled to vote, abstains from voting, or votes against the Plan and does not opt out of the 

Third Party Release on a timely submitted Ballot, will be deemed to have expressly, 

unconditionally, generally, individually, and collectively released and discharged all claims and 

Causes of Action against the Released Parties. 

In addition, the Plan provides for the exculpation of: (a) the Debtors; (b) the Reorganized 

Debtors; (c) the Committee; (d) the individual members of the Committee; (e) the DIP Lenders; and 

(f) with respect to each of the foregoing (a) through (e), such Entity and its current and former Affiliates, 

and such Entity’s and its current and former Affiliates’ current and former members, equity holders 

(regardless of whether such interests are held directly or indirectly), subsidiaries, officers, directors, 

managers, predecessors, successors, assigns, principals, members, employees, agents, advisory board 

members, financial advisors, partners, attorneys, accountants, restructuring advisors, investment bankers, 

consultants, representatives, and other professionals, each in their capacity as such. 

The Debtors’ Releases, third party releases, and exculpation provisions included in the Plan 

comply with the Bankruptcy Code and prevailing law because, among other reasons, they are the product 

of extensive good faith, arm’s-length negotiations and were material inducements for the contributions 

provided by the Released Parties. These provisions were an integral part of the Debtors’ overall 

restructuring efforts and were an essential element of the negotiations among the Debtors, the Committee 

and creditors and an integral part of the Plan. In addition, the Released Parties and the Exculpated Parties 

have made substantial and valuable contributions to the Debtors’ restructuring that will maximize and 

preserve the going-concern value of the Debtors for the benefit of all parties in interest. Accordingly, 

each of the Released Parties and the Exculpated Parties warrants the benefit of the release and exculpation 

provisions. 

1. Releases by the Debtors 

The Debtors’ Releases are fair and equitable, in the best interest of the Debtors’ Estates, and well 

within the Debtors’ business judgment. 

First, the Debtors and the Committee undertook to investigate potential Estate claims and Causes 

of Action. The Debtors believe that the potential proceeds of Estate Claims and Causes of Action would 

not be significant in light of the complex and time consuming litigation that would accompany 

prosecution thereof and, accordingly, that the settlements embodied in the Plan and the corresponding 

releases are fair based on the value to the Debtors’ Estates and their creditors in light of the cost of 

developing and prosecuting such Causes of Action. 

The Debtors’ Releases appropriately offer protection to parties that meaningfully participated in 

the Debtors’ restructuring process, including the DIP Lenders, the Committee and the members thereof. 

Specifically, these parties have agreed to support the Plan and provide mutual releases to the Released 

Parties, paving the way to the Debtors’ exit from these Chapter 11 Cases. 

Two important compromises are embedded in the treatment and classification of claims under the 

Plan. First, with respect to the Syndicated Bank Loan Lenders, the asserted claims based on the 

Syndicated Bank Loan is approximately $159,113,879.40, comprised of a dollar-denominated facility of 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 34 of 92
 24 

$45,000,000 and a MXN denominated facility of $126,117,852 (based on then-applicable conversion 

rates as of the date of the calculation). As part of the construction of the Plan, the Debtors placed the 

Syndicated Bank Loan Lenders into a separate class to provide for a significantly diminished treatment 

based on several factors. First, the Syndicated Bank Loan has full recourse to both Grupo Cinemex and 

Operadora, which recourse is fully preserved in the Plan. Second, to the extent that the Debtors could 

bring any potential avoidance action with respect to the creation of or payments under the Syndicated 

Bank Loan against the Syndicated Bank Loan Lenders (including with respect to a payment in the amount 

of $488,701.65 in respect of the Syndicated Bank Loan made within 90 days of the Petition Date), those 

are settled and compromised through the classification and treatment of the Allowed Syndicated Bank 

Loan Claims. But for the separate classification and treatment, the Allowed Syndicated Bank Loan 

Claims would be entitled to approximately $3.6 million of the GUC Claims Allocation, leaving non-bank 

GUCs with only $1.1 million (compared to ~$5 million) in distributions or approximately 2.6% 

(compared to 11-15%) of their claims, exclusive of the TLCF Note. 

With respect to the Intercompany Claims consisting of approximately $60 million in advances to 

the Debtors from corporate parents, Grupo Cinemex and Operadora, separate classification and 

compromise also enhances creditor recoveries. First, the treatment of the Intercompany Claims is to 

subordinate and make no distributions to these claims. Because these two entities were both Borrowers 

under the Syndicated Bank Loan and the only Holders of Interests in Cinemex Holdings, the combination 

of separate classification and zero distributions on account of these Intercompany Claims represents a 

very favorable compromise of any possible Avoidance Action or Cause of Action that might have been 

asserted. Therefore, the classification and treatment of the Syndicated Bank Loan Claims (that vote) and 

the Intercompany Claims (that do not vote) represent a global compromise to be implemented under the 

Plan. The different recourse and nature of the claims in these two class more than justifies their 

classification and treatment. The Plan does not artificially classify similar claims separately. 

Second, to the extent the Released Parties have indemnification rights against the Debtors under 

applicable agreements for, among other things, all losses, damages, claims, liabilities, or expenses, 

including defense costs, for claims subject to the release provisions of the Plan, these claims could 

directly affect the Debtors’ Estates. Moreover, there is no question that directors, managers, and officers 

provided (and continue to provide) valuable consideration to the Debtors, as they commit substantial time 

and effort (in addition to their prepetition responsibilities) to the Debtors’ Estates and restructuring efforts 

throughout this chapter 11 process. 

Third, the Debtors’ Releases were vigorously negotiated at arms-length by sophisticated entities 

that were represented by able counsel and financial advisors and were a necessary and integral element of 

consideration that these parties required before agreeing to provide the consideration contemplated by the 

settlements. 

Fourth, because the Debtors’ Releases are consensual, a carve-out for claims and Causes of 

Action related to actual fraud, gross negligence, or willful misconduct is unnecessary. The Released 

Parties that benefit from the Debtors’ Releases are providing consideration as set forth above, and the 

Debtors are consenting to the releases, which were a necessary component of the overall bargain that has 

put the Debtors on the path to a value maximizing restructuring. Such releases are permissible under 

applicable law and, as a compromise under the Bankruptcy Code, do not require carve-outs for actual 

fraud, gross negligence, or willful misconduct. 

Accordingly, the Debtors submit that the Debtors’ Releases are consistent with applicable law, 

represents a valid settlement and release of claims the Debtors may have against the Released Parties 

pursuant to section 1123(b)(3)(A) of the Bankruptcy Code, are a valid exercise of the Debtors’ business 

judgment, and are in the best interests of their Estates. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 35 of 92
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2. Third Party Release 

Similarly, the Third Party Release is integral to the Plan and is a condition of the settlements 

embodied therein. The provisions of the Plan were heavily negotiated by sophisticated parties, 

represented by competent counsel. The Third Party Release (together with the Debtors’ Releases) are key 

components of the Debtors’ restructuring and a key inducement to bring stakeholder groups to the 

bargaining table. Put simply, the Released Parties were unwilling to provide value to the Debtors’ Estates 

without assurances that they would not be subject to post-emergence litigation or other disputes related to 

the restructuring. The Third Party Release therefore not only benefits the non-Debtor Released Parties, 

but also the Debtors’ post-emergence enterprise as a whole. 

Importantly, the Third Party Release is consensual because it provides Holders of Claims and 

Interests (other than those Holders who vote to accept the Plan) with the option to opt out of the Third 

Party Release by checking a box on the Ballot or Opt Out Form provided by the Debtors. Each of the 

Disclosure Statement, Ballots, notices of non-voting status, and notice of Confirmation Hearing state in 

bold-faced, conspicuous text that Holders of Claims and Interests that do not opt out of the Third Party 

Release will be bound thereby. Accordingly, upon electing to opt out, such Holders of Claims or Interests 

do not grant the Third Party Release and no longer have a basis to argue their rights are affected thereby. 

The Third Party Release complies with applicable law: First, the Third Party Release is 

sufficiently specific to put the Releasing Parties on notice of the released claims. Second, the Third Party 

Release is integral to the Plan and the settlement and compromise therein. The provisions of the Plan 

were heavily negotiated by sophisticated parties, represented by competent counsel, for which the Third 

Party Release was a material inducement. Third, as described more fully above, each of the Released 

Parties under the Third Party Release provided consideration (and are also Releasing Parties themselves, 

thereby making the release mutual). 

Notwithstanding anything to the contrary in the foregoing or otherwise in the Plan, Plan 

Supplement or Confirmation Order, (i) in no event shall any of the Syndicated Bank Loan Lenders or the 

Syndicated Bank Loan Agent (regardless of whether they have opted out of the releases or otherwise) be 

deemed to have released or discharged any claims, rights, defenses or Causes of Action they may have 

against Grupo Cinemex, Operadora De Cinemas, S.A. DE C.V. or any other non-Debtor Entity arising 

under or related to the Syndicated Bank Loan Credit Agreement and related documentation, and (ii) in no 

event shall any holder of a GUC Claim based on or arising from a contractual obligation, the liability for 

which is subject to a guarantee or payment assurance by Grupo Cinemex, Operadora De Cinemas, S.A. 

DE C.V. or any other non-Debtor Entity, be deemed to have released or discharged any claims or causes 

of action they may have against Grupo Cinemex, Operadora De Cinemas, S.A. DE C.V. or any other nonDebtor Entity arising under or related to such contract, whether or not rejected prior to the Confirmation 

Date, and whether or not rejected prior to the Confirmation Date and whether or not such non-Debtor 

Entity opts out of the Releases on their respective Ballot. 

Ultimately, the restructuring contemplated by the Plan operates to maximize the Debtors’ fresh 

start by minimizing the possibility of distracting post-emergence litigation or costs associated with the 

continuation of disputes related to the Debtors’ restructuring, and would not be possible absent the 

support of the Released Parties. 

3. Exculpation 

In addition to the Debtor release and Third Party Release, the exculpation clause in the Plan 

provides that only the Debtors and Reorganized Debtors, the DIP Lenders, the Purchaser, the Committee, 

and the individual members of the Committee, and related parties of the foregoing are exculpated from 

any Causes of Action arising out of acts or omissions related to these Chapter 11 Cases and certain related 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 36 of 92
 26 

transactions as set forth therein—except for acts or omissions that are found to have been the product of 

actual fraud, willful misconduct, or gross negligence, or as otherwise set forth in the Plan. For the 

avoidance of doubt, neither Grupo Cinemex, Operadora De Cinemas, S.A. DE C.V., or any other Entity 

that is not a Debtor shall be an Exculpated Party in their capacity as a (i) “Loan Party” with respect to 

claims or causes of action arising under or relating to the Syndicated Bank Loan Credit Agreement; or (ii) 

a contractual obligor to any holder of a GUC Claim, including without limitation, as a guarantor or surety 

with respect to any guarantees or payment assurances arising under or relating to Executory Contracts and 

Unexpired Leases, whether or not rejected prior to the Confirmation Date. 

As such, the exculpation clause is reasonable, appropriate, and vital to these Chapter 11 Cases 

because it provides protection to parties who served as fiduciaries to the Estates during the restructuring. 

First, the Debtors and Reorganized Debtors are entitled to the benefits of the exculpation clause. 

Upon a “good faith” finding within the meaning of section 1125(e) of the Bankruptcy Code, such parties 

are entitled to the protections afforded by section 1125(e) of the Bankruptcy Code and the exculpation 

clause. Further, granting such relief falls squarely within the “fresh start” principles underlying the 

Bankruptcy Code. 

Second, certain other Exculpated Parties owe fiduciary duties in favor of the Debtors’ Estates, 

permitting them to receive the benefits of the exculpation clause. The Committee owes fiduciary duties to 

the general unsecured creditors, and the directors, officers, and advisors that have acted on the Debtors’ 

behalf in these Chapter 11 Cases owe the Debtors similar duties. The directors, officers, and 

professionals that have acted on behalf of the Debtors’ in connection with the Chapter 11 Cases owe the 

Debtors fiduciary duties similar to those the debtor in possession owes to the Estates. Further, the 

Debtors and their fiduciaries could not possibly have developed the Plan without the support and 

contributions of the Exculpated Parties. 

Accordingly, the failure to approve the exculpation clause would undermine the purpose of the 

Plan as set forth in the Plan and this Disclosure Statement by allowing parties to pursue claims postbankruptcy that are otherwise fully and finally resolved by the Plan when the Exculpated Parties 

participated in these chapter 11 cases in reliance upon the protections afforded to those constituents by the 

exculpation clause. 

Based on the foregoing, the Debtors believe that the releases and exculpations in the Plan are 

necessary and appropriate and meet the requisite legal standard promulgated by the United States Court of 

Appeals for the Eleventh Circuit. Moreover, the Debtors are prepared to present evidence at the 

Confirmation Hearing to demonstrate the basis for and propriety of the release and exculpation 

provisions. The release, exculpation, and injunction provisions that are contained in the Plan are copied 

in pertinent part below. 

4. Release of Liens. 

Except as otherwise specifically provided in the Plan or in any contract, instrument, release, 

or other agreement or document created pursuant to the Plan, on the Effective Date, except with 

regard to Other Secured Claims that the Debtors elect to Reinstate in accordance with Article 

III.B.2(b) of the Plan, all mortgages, deeds of trust, Liens, pledges, or other security interests 

against any property of the Estates shall be fully released and discharged, and all of the right, title, 

and interest of any Holder of such mortgages, deeds of trust, Liens, pledges, or other security 

interests shall revert to the Reorganized Debtors and their successors and assigns (including 

Reorganized Cinemex Holdings, if applicable), in each case, without any further approval or order 

of the Bankruptcy Court and without any action or Filing being required to be made by the 

Debtors or the Reorganized Debtors, as applicable. 

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5. Releases by the Debtors. 

Pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, 

on and after the Effective Date, each Released Party is deemed released and discharged by the 

Debtors, the Reorganized Debtors, and their Estates, from any and all claims and Causes of Action 

whether known or unknown, including any derivative claims, asserted on behalf of the Debtors, 

that the Debtors, the Reorganized Debtors, or their Estates would have been legally entitled to 

assert in their own right (whether individually or collectively) or on behalf of the Holder of any 

Claim or Interest, based on or relating to, or in any manner arising from, in whole or in part, the 

Debtors (including the day-to-day management of the Debtors, any decisions made or not made by 

the Debtors’ board members, and/or the ownership or operation of the Debtors), Reorganized 

Cinemex Holdings (including the formation thereof, if applicable), the Debtors’ in- or out-of-court 

restructuring efforts, the New Organizational Documents, any preference or avoidance claims 

pursuant to sections 544, 547, 548, or 549 of the Bankruptcy Code, the formulation, preparation, 

dissemination, negotiation, or consummation of the GUC Claims Trust Agreement or the Cap-Ex 

Escrow Agreement, the settlement and compromise contemplated by the Plan, or any 

Restructuring Transaction, contract, instrument, release, or other agreement or document 

(including providing any legal opinion requested by any Entity regarding any transaction, contract, 

instrument, document, or other agreement contemplated by the Plan or the reliance by any 

Released Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or 

entered into in connection with the Disclosure Statement, the Plan, the Chapter 11 Cases, the filing 

of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the 

administration and implementation of the Plan, including the issuance or distribution of Securities 

pursuant to the Plan (if any), or the distribution of property under the Plan, or any other related 

agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence 

taking place on or before the Effective Date related or relating to the foregoing. Notwithstanding 

anything to the contrary in the foregoing, the releases set forth above do not release any postEffective Date obligations of any party or Entity under the Plan, any Restructuring Transaction, or 

any document, instrument, or agreement (including those set forth in the Plan Supplement) 

executed to implement the Plan. 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, pursuant to 

Bankruptcy Rule 9019, of the releases described herein, which includes by reference each of the 

related provisions and definitions contained in the Plan, and further, shall constitute the 

Bankruptcy Court’s finding that the releases described herein are: (1) in exchange for the good and 

valuable consideration provided by or on behalf of the Released Parties; (2) a good faith settlement 

and compromise as set forth herein; (3) in the best interests of the Debtors and all Holders of 

Claims and Interests; (4) fair, equitable, and reasonable; (5) given and made after due notice and 

opportunity for hearing; and (6) a bar to any of the Debtors, the Reorganized Debtors, or the 

Debtors’ Estates, asserting any claim or Cause of Action released pursuant to the releases described 

herein or asserting (directly or indirectly). 

6. Releases by Holders of Claims and Interests. 

As of the Effective Date, except to enforce distributions under the Plan, each Releasing 

Party is deemed to have released and discharged each Released Party from any and all claims and 

Causes of Action, including claims and Causes of Action, whether known or unknown, including 

any derivative claims, asserted on behalf of the Debtors, that such Entity would have been legally 

entitled to assert (whether individually or collectively), based on or relating to, or in any manner 

arising from, in whole or in part, the Debtors (including the day-to-day management of the 

Debtors, any decisions made or not made by the Debtors’ board members, and/or the ownership or 

operation of the Debtors), Reorganized Cinemex Holdings (including the formation thereof), the 

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Debtors’ in- or out-of-court restructuring efforts, any intercompany transactions, transactions 

pursuant and/or related to the DIP Loan, the New Organizational Documents, the DIP Order (and 

any payments or transfers in connection therewith), the formulation, preparation, dissemination, 

negotiation, or consummation of the GUC Claims Trust Agreement or the Cap-Ex Escrow 

Agreement, the settlement and compromise contemplated by the Plan, or any Restructuring 

Transaction, contract, instrument, release, or other agreement or document (including providing 

any legal opinion requested by any Entity regarding any transaction, contract, instrument, 

document, or other agreement contemplated by the Plan or the reliance by any Released Party on 

the Plan or the Confirmation Order in lieu of such legal opinion) created or entered into in 

connection with the Disclosure Statement, the Plan, the Chapter 11 Cases, the filing of the Chapter 

11 Cases, the pursuit of Confirmation, the administration and implementation of the Plan, 

including the issuance or distribution of Securities pursuant to the Plan (if any), or the distribution 

of property under the Plan, or any other related agreement, or upon any other act or omission, 

transaction, agreement, event, or other occurrence taking place on or before the Effective Date 

related or relating to the foregoing. 

In order to avoid being deemed a Releasing Creditor and granting the releases set forth in 

Article VIII of the Plan, a creditor casting a ballot for acceptance or rejection of the Plan must 

indicate its intent to opt out of the releases by checking the “OPT OUT” box on its Ballot. Parties 

that do not vote may opt out of these releases by submission of an Opt Out Form in advance of the 

deadline for voting on the Plan. Creditors and other parties in interest who fail to take such action 

shall be deemed to have consented to the third-party release provision contained in Article VIII.D 

of the Plan. 

Notwithstanding anything to the contrary in the foregoing or otherwise in the Plan, Plan 

Supplement or Confirmation Order, (i) in no event shall any of the Syndicated Bank Loan Lenders 

or the Syndicated Bank Loan Agent (regardless of whether they have opted out of the releases or 

otherwise) be deemed to have released or discharged any claims they may have against Grupo 

Cinemex, Operadora De Cinemas, S.A. DE C.V. or any other non-Debtor Entity arising under or 

related to the Syndicated Bank Loan Credit Agreement and related documentation, and (ii) in no 

event shall any holder of a GUC Claim based on or arising from a contractual obligation, the 

liability for which is subject to a guarantee or payment assurance by Grupo Cinemex, Operadora 

De Cinemas, S.A. DE C.V. or any other non-Debtor Entity, be deemed to have released or 

discharged any claims or causes of action they may have against Grupo Cinemex, Operadora De 

Cinemas, S.A. DE C.V. or any other non-Debtor Entity arising under or related to such contract, 

whether or not rejected prior to the Confirmation Date, and whether or not rejected prior to the 

Confirmation Date and whether or not such non-Debtor Entity opts out of the Releases on their 

respective Ballot. 

Entry of the Confirmation Order shall constitute the Bankruptcy Court’s approval, 

pursuant to Bankruptcy Rule 9019, of the releases described herein, which includes by reference 

each of the related provisions and definitions contained herein, and, further, shall constitute the 

Bankruptcy Court’s finding that each release described herein is: (1) consensual; (2) essential to the 

Confirmation of the Plan; (3) given in exchange for the good and valuable consideration provided 

by the Released Parties; (4) a good faith settlement and compromise of the Settled Actions; (5) in 

the best interests of the Debtors and their Estates; (5) fair, equitable, and reasonable; (6) given and 

made after due notice and opportunity for hearing; and (7) a bar to any of the Releasing Parties 

asserting any claim or Cause of Action released pursuant to the releases described herein. 

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7. Exculpation. 

Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or 

incur liability for, and each Exculpated Party is hereby released and exculpated from, any Cause of 

Action for any claim related to any act or omission in connection with, relating to, or arising out of, 

the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, Filing, or 

termination of any prepetition transactions, the Disclosure Statement, the Plan, or any 

Restructuring Transaction, contract, instrument, release, or other agreement or document 

(including providing any legal opinion requested by any Entity regarding any transaction, contract, 

instrument, document, or other agreement contemplated by the Plan or the reliance by any 

Exculpated Party on the Plan or the Confirmation Order in lieu of such legal opinion) created or 

entered into in connection with the Disclosure Statement, the Plan, the GUC Claims Trust 

Agreement, the Cap-Ex Escrow Agreement, the Filing of the Chapter 11 Cases, the negotiation, 

terms, or execution of the settlement and compromise effectuated pursuant to Federal Rule of 

Bankruptcy Procedure 9019, the pursuit of Confirmation, the pursuit of Consummation, the 

administration and implementation of the Plan, including the issuance of Securities pursuant to the 

Plan (if any), or the distribution of property under the Plan, or any other related agreement, except 

for claims related to any act or omission that is determined in a final order to have constituted 

actual fraud, willful misconduct, or gross negligence, but in all respects such Entities shall be 

entitled to reasonably rely upon the advice of counsel with respect to their duties and 

responsibilities pursuant to or in connection with the Plan and the Restructuring Transactions. 

The Exculpated Parties have, and upon completion of the Plan shall be deemed to have, 

participated in good faith and in compliance with the applicable laws with regard to the solicitation 

of, and distribution of, consideration pursuant to the Plan and, therefore, are not, and on account of 

such distributions shall not be, liable at any time for the violation of any applicable law, rule, or 

regulation governing the solicitation of acceptances or rejections of the Plan or such distributions 

made pursuant to the Plan. 

8. Injunction. 

Except as otherwise expressly provided in the Plan or for obligations issued or required to 

be paid pursuant to the Plan or the Confirmation Order, all Entities that have Held, Hold, or may 

Hold Claims or Interests that have been released pursuant to Article VIII.C or Article VIII.D of the 

Plan, shall be discharged pursuant to Article VIII.A of the Plan, or are subject to exculpation 

pursuant to Article VIII.E of the Plan, are permanently enjoined, from and after the Effective Date, 

from taking any of the following actions against, as applicable, the Debtors, the Reorganized 

Debtors, or the Released Parties: (1) commencing or continuing in any manner any action or other 

proceeding of any kind on account of or in connection with or with respect to any such claims or 

interests; (2) enforcing, attaching, collecting, or recovering by any manner or means any judgment, 

award, decree, or order against such Entities on account of or in connection with or with respect to 

any such claims or interests; (3) creating, perfecting, or enforcing any Lien or encumbrance of any 

kind against such Entities or the property or the estates of such Entities on account of or in 

connection with or with respect to any such claims or interests; (4) asserting any right of setoff, 

subrogation, or recoupment of any kind against any obligation due from such Entities or against 

the property of such Entities on account of or in connection with or with respect to any such claims 

or interests unless such Entity has timely asserted such setoff right in a document Filed with the 

Bankruptcy Court explicitly preserving such setoff, and notwithstanding an indication of a claim or 

interest or otherwise that such Entity asserts, has, or intends to preserve any right of setoff 

pursuant to applicable law or otherwise; and (5) commencing or continuing in any manner any 

action or other proceeding of any kind on account of or in connection with or with respect to any 

such claims or interests released or settled pursuant to the Plan. 

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9. Channeling Injunction. 

Except as otherwise specifically provided in the Plan, the Enjoined Parties shall be 

permanently restrained and enjoined, with regard to the Claims set forth in this Article VIII.H (1)-

(6) (collectively, the “Enjoined Claims”) from ever: 

1. commencing, asserting, continuing, filing, conducting, or bringing, directly, indirectly, 

or derivatively, any Claim, demand, suit, action, or other proceeding of any kind 

(including, without limitation, any proceeding in a judicial, arbitral, administrative, or 

other forum), against any of the Released Parties, or their respective property, including 

the proceeds of such property, with regard to all matters arising out of or related to any 

involvement of any of the Released Parties whatsoever in transactions, acts, or events in 

any manner related to the Debtors and their predecessors, affiliates, successors, 

principals, directors, officers, and related entities; 

2. asserting, continuing, filing, conducting, or bringing, directly, indirectly, or derivatively, 

any Claim, demand, suit, action, or other proceeding of any kind (including, without 

limitation, any proceeding in a judicial, arbitral, administrative, or other forum), 

against any of the Released Parties, or their respective property, including the proceeds 

of such property that would result in the avoidance of allegedly fraudulent (actual or 

constructive) or preferential transfers from the Debtors to any of the Released Parties, 

regardless of whether such Released Party is the initial or subsequent transferee, and/or 

recovery of such allegedly fraudulent (actual or constructive) or preferential transfers 

from such Released Party; 

3. enforcing, levying, employing legal process (including proceedings supplementary), 

whether prejudgment or post-judgment, attaching, garnishing, sequestering, collecting, 

or otherwise recovering by any means or in any manner, any Claims against the 

Released Parties, or their respective property, including the proceeds of such property, 

with regard to all matters arising out of or related to any involvement of any of the 

Released Parties whatsoever in transactions, acts, or events in any manner related to the 

Debtors, and their predecessors, affiliates, successors, principals, directors, officers, and 

related entities; 

4. pursuing, aiding, or abetting any action brought by any person or entity seeking 

recovery, contribution and/or indemnity from any of the Released Parties, or their 

respective property, including the proceeds of such property, with regard to all matters 

arising out of or related to any involvement of any of the Released Parties whatsoever in 

transactions, acts, or events in any manner related to the Debtors and their 

predecessors, affiliates, successors, principals, directors, officers, and related entities; 

5. enforcing any terms set forth in any settlement agreement by and among any of the 

Released Parties and any of the Enjoined Parties that would resolve, compromise, or 

settle Claims that would otherwise be enjoined by the channeling injunction set forth in 

this section; and 

6. pursuing any of the Enjoined Claims recited herein as they relate to any Claims against 

retained professionals including accountants and legal counsel as well as their agents 

and assigns of any of the Released Parties. 

The injunction described in this section and incorporated into the Confirmation Order shall 

be referred to as the “Channeling Injunction.” 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 41 of 92
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The Bankruptcy Court shall expressly retain jurisdiction in enforcing, implementing and 

interpreting the scope of the Channeling Injunction. 

V. What impact does the Claims Bar Date have on my Claim? 

On June 11, 2020, the Debtors Filed their schedules of assets and liabilities and statement of 

financial affairs with the Bankruptcy Court pursuant to section 521 of the Bankruptcy Code (collectively, 

as amended from time to time, the “Schedules”). The Bankruptcy Code allows a bankruptcy court to fix 

the time within which proofs of claim must be Filed in a chapter 11 case. 

The Bar Date by which Proofs of Claims and Interests must be Filed in these Chapter 11 Cases, 

established pursuant to Local Bankruptcy Rule 3003-1 and the 341 Notice, was July 6, 2020, except with 

respect to Proofs of Claims filed by governmental units and certain other exceptions set forth in the 341 

Notice. The deadline for filing claims by Governmental Units (the “Governmental Bar Date”) is October 

22, 2020 with respect to Cinemex Holdings and Cinemex Holdings USA, Inc., and October 23, 2020 with 

respect to CB Theater Experience LLC, which are the respective dates 180 days after the Debtors 

commenced the Chapter 11 Cases. 

In accordance with Bankruptcy Rule 3003(c)(2), if any person or Entity that is required, but fails, 

to File a Proof of Claim on or before the Bar Date, except in the case of certain exceptions explicitly set 

forth in the 341 Notice or by further order of the Bankruptcy Court, such person or Entity will 

be: (1) barred from asserting such Claims against the Debtors in these Chapter 11 Cases; (2) precluded 

from voting on any plans of reorganization Filed in these Chapter 11 Cases; and (3) precluded from 

receiving distributions from the Debtors on account of such Claims in these Chapter 11 Cases. 

Notwithstanding the foregoing, a Holder of a Claim shall be able to assert, vote upon, and receive 

distributions under the Plan, or any other plan of reorganization or liquidation in the Chapter 11 Cases, to 

the extent, and in such amount, as any undisputed, non-contingent, and liquidated Claims identified in the 

Schedules on behalf of such Claim Holder. 

As described in this Disclosure Statement, the distribution you receive on account of your Claim 

(if any) may depend, in part, on the amount of Claims for which Proofs of Claim were Filed on or before 

the Claims Bar Date. 

W. What is the effect of the Plan on the Debtors’ ongoing business? 

The Debtors will reorganize under chapter 11 of the Bankruptcy Code. Following Confirmation, 

the Plan will be consummated on the Effective Date, which is a date selected by the Debtors that is the 

first business day after which all conditions to Consummation have been satisfied or waived. See Article 

IX of the Plan. On or after the Effective Date and unless otherwise provided in the Plan, the Reorganized 

Debtors may operate their business and, except as otherwise provided by the Plan, may use, acquire, or 

dispose of property and compromise or settle any Claims, Interests, or Causes of Action without 

supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or 

Bankruptcy Rules. On and after the Effective Date, after prior consultation with the GUC Claims 

Trustee, the Reorganized Debtors may maintain or dispose of documents in accordance with their 

standard document retention policy, as may be altered, amended, modified, or supplemented by the 

Reorganized Debtors. Additionally, upon the Effective Date, all actions contemplated by the Plan will be 

deemed authorized and approved. 

X. Who do I contact if I have additional questions with respect to this Disclosure 

Statement or the Plan? 

If you have any questions regarding this Disclosure Statement or the Plan, please contact: 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 42 of 92
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By regular mail, hand delivery, or overnight mail: 

Cinemex Holdings USA, Inc. 

175 South West 7th Street, Suite 1108 

Miami, Florida 33130

By electronic mail: 

scottshelley@quinnemanuel.com or 

razmigizakelian@quinnemanuel.com

with a reference to “Cinemex Plan Voting” in the 

subject line 

By telephone: 

(212) 849-7358 or (213) 443-3668 

Copies of the Plan, this Disclosure Statement, and any other publicly Filed documents in the 

Chapter 11 Cases are available upon written request to the Notice and Claims Agent at the address above 

or by downloading the documents from the website of the Debtors’ Notice and Balloting Agent at 

https://cases.omniagentsolutions.com/Cinemex (free of charge) or the Bankruptcy Court’s website at 

http://www.flsb.uscourts.gov (for a fee). 

Y. What is the deadline to vote on the Plan? 

The deadline by which Holders of Claims may vote to accept or reject the Plan (the “Voting 

Deadline”) is [●], at 4:00 p.m. (prevailing Eastern Time). 

Z. How do I vote for or against the Plan? 

Detailed instructions regarding how to vote on the Plan are contained on the ballots distributed to 

Holders of Claims that are entitled to vote on the Plan. For a vote to be counted, ballots must be 

completed, signed, returned as directed, and actually received by [●], at 4:00 p.m. (prevailing Eastern 

Time), the Voting Deadline. See Article IX of this Disclosure Statement, entitled “SOLICITATION 

AND VOTING PROCEDURES,” which begins on page 49. 

AA. Why is the Bankruptcy Court holding a Confirmation Hearing? 

Section 1128(a) of the Bankruptcy Code requires the Bankruptcy Court to hold a hearing on 

confirmation of the Plan and recognizes that any party in interest may object to Confirmation of the Plan. 

BB. When is the Confirmation Hearing set to occur? 

The Bankruptcy Court has scheduled the Confirmation Hearing for [●] at [●] (prevailing Eastern 

Time). The Confirmation Hearing may be adjourned from time to time without further notice. 

Objections to Confirmation of the Plan must be Filed and served on the Debtors, and certain other 

parties, by no later than [●], at 4:00 p.m. (prevailing Eastern Time) in accordance with the notice of the 

Confirmation Hearing that accompanies this Disclosure Statement and the Disclosure Statement Order 

attached hereto as Exhibit C and incorporated herein by reference.

The Debtors will publish the notice of the Confirmation Hearing, which will contain the deadline 

for objections to the Plan and the date and time of the Confirmation Hearing, the national edition of the 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 43 of 92
 33 

Wall Street Journal to provide notification to those persons who may not receive notice by mail. The 

Debtors may also publish the notice of the Confirmation Hearing in such trade or other publications as the 

Debtors may choose. 

CC. What is the purpose of the Confirmation Hearing? 

The confirmation of a plan of reorganization by a bankruptcy court binds the debtor, any issuer of 

securities under a plan of reorganization, any person acquiring property under a plan of reorganization, 

any creditor or equity interest holder of a debtor, and any other person or entity as may be ordered by the 

bankruptcy court in accordance with the applicable provisions of the Bankruptcy Code. Subject to certain 

limited exceptions, the order issued by the bankruptcy court confirming a plan of reorganization 

discharges a debtor from any debt that arose before the confirmation of such plan of reorganization and 

provides for the treatment of such debt in accordance with the terms of the confirmed plan of 

reorganization. 

DD. Do the Debtors recommend voting in favor of the Plan? 

Yes. The Debtors believe the Plan provides for a larger distribution to the Debtors’ creditors than 

would otherwise result from any other available alternative. The Debtors believe the Plan will result in 

meaningful recoveries for creditors and enables them to emerge from chapter 11 expeditiously, is in the 

best interest of all Holders of Claims, and that any other alternatives (to the extent they exist) fail to 

realize or recognize the value inherent under the Plan. 

EE. Who supports the Plan? 

The Debtors and the Committee support the Plan. 

V. THE DEBTORS’ CORPORATE HISTORY, STRUCTURE, AND BUSINESS 

OVERVIEW 

A. The Debtors’ Business 

The Debtors are in the movie theater business. Prior to the Petition Date, the Cinemex operated 

41 theater locations in 12 states including Florida (with multiple theaters in South Florida), Alabama, 

Colorado, Georgia, Illinois, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio and 

Virginia. The theaters operate under the brand name “CMX Cinemas.” 

Cinemex’s core business is within a niche market of the movie theater industry called “dining 

theaters.” The concept behind Cinemex is to provide guests with an all-inclusive going-out experience: 

guests can dine, drink and attend a movie by going to a single location. Cinemex thus has fine dining 

restaurants and bars on site as well as offers guests the opportunity to order food and drinks from their 

seats during the movie. Grupo Cinemex has dining theaters in Mexico and thus the strategy was for 

Cinemex to replicate that model in the United States. Cinemex also offers state-of-the-art technology 

such as IMAX, 3D and surround sound and amenities such as full reclining seats. Most of the theaters are 

located in shopping malls, while less than 10 are housed in standalone buildings. 

Cinemex’s long-term strategic objective is to expand the CMX Cinemas brand across the United 

States and become the leading “dining theater” company. This is because it will likely become more 

difficult for the traditional industry model – which is to watch a movie with just the option of snacks and 

drinks, such as sodas and water – to compete with streaming services, which are less expensive and offer 

the convenience of watching films at any time and from any location. In order to incentivize guests to 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 44 of 92
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watch movies in a theater, Cinemex has focused on creating high-quality restaurants and bars on site and 

offering luxury amenities such as in-seat dining. 

The first Cinemex theater opened in Miami (at Brickell City Center) in April 2017. In September 

2017, Cinemex acquired four additional theaters from Paragon Entertainment located in Florida, Illinois 

and Minnesota. In December 2017 and through its acquisition of Cobb Theatres and CinéBistro, it 

acquired 25 additional theaters, located in Florida, Alabama, Georgia, Ohio and Virginia (among others). 

As part of its long-term strategy, Cinemex has invested heavily in the past year in building new theaters 

(“New Theaters”). These include theaters in Atlanta, Georgia, Naples, Florida, East Rutherford, New 

Jersey, and Chicago, Illinois, which are under construction and at different phases of completion. 

Beginning in mid-March 2020, the unprecedented worldwide pandemic resulting from the spread 

of the Coronavirus (COVID-19) has substantially and adversely affected Cinemex and its operations 

along with the rest of the movie theater industry as well as traditional “brick and mortar” retail operations. 

Cinemex’s entire operations have ground to a halt. At present, and for the immediate foreseeable future, 

most of Cinemex’s theaters are shut down. All but approximately 30 of Cinemex’s 2,500 employees 

were furloughed, and Cinemex did not receive any revenues from movie sales from approximately March 

20, 2020 until limited reopening started in September 2020. Because the duration of the COVID-19 

pandemic is presently unknown, Cinemex, as with all other movie theater operators, expects demand to 

remain very weak to non-existent for the indefinite future. Even when Cinemex is able to reopen some of 

its theaters, it is very uncertain as to whether customers will start going out again to see movies. 

In response to financial difficulties caused by the COVID-19 pandemic, Cinemex has been, and is 

making, immediate and significant changes to its operations in order to adjust to the precipitous decline in 

revenue. Cinemex is also taking action to reduce operating expenses and try to improve cash flow. As 

part of these measures, Cinemex filed the Chapter 11 Cases in order to preserve its assets for the benefit 

of all stakeholders, including employees, creditors and equity. 

Even before the onset of the pandemic and nationwide shutdown in the United States – which 

completely cut off all revenue streams – Cinemex was generating limited revenues in view of its 

obligations to pay high fixed costs. In particular, the biggest share of revenues were being paid to 

landlords for rent and film studios for licensing fees. In particular, Cinemex was spending approximately 

30% of its annual revenues on lease-related expenses and also having to pay fees to film studios that were 

close to 60% of each movie ticket sold. Cinemex typically pays film studios a set percentage of box 

office sales on a weekly basis pursuant to master licensing agreements (“MLA[s]”) as well as further 

negotiated terms for particular films issued by each studio. For example, if Cinemex sells $100,000 worth 

of tickets in a week for a particular film and the arrangement is that the film studio gets 60% of sales, 

Cinemex must pay $60,000 to the studio for that week. 

Through the Chapter 11 proceeding, Cinemex has been (i) identifying which theaters are not 

profitable, which ones are profitable and which ones can be profitable; and (ii) seeking to renegotiate 

leases with landlords and revenue-sharing agreements with studios and, in turn, rebalance what has 

become economically untenable for companies in the movie theater industry. Specifically, the current 

economic arrangements disproportionately benefit the studios and landlords at the expense of the theater 

companies. With the filing of the Chapter 11 Petitions, Cinemex aims to restructure its business while 

protecting its employees and emerging in a strong and viable long-term financial condition to continue to 

serve its customers across the United States. 

Cinemex has the support of Grupo Cinemex, the parent company of Cinemex Holdings (which, in 

turn, is the holding company of Cinemex Real Estate and CB Theaters), in the form of emergency debtorin-possession financing that enabled it to satisfy its obligations during the Chapter 11 proceeding. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 45 of 92
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B. Corporate Structure, Assets and Operations 

Cinemex Holdings is a Delaware corporation that was founded and incorporated in February 

2014. Cinemex Holdings is the holding company for five U.S. entities: (i) Cinemex Real Estate; (ii) CB 

Theater; (iii) Cinemex USA Enterprises, LLC (“Cinemex Enterprises”); (iv) Cinemex MD, LLC 

(“Cinemex MD”); and (v) Cinemex AD, LLC (collectively with Cinemex Holdings, “Cinemex USA”). 

Cinemex Enterprises, Cinemex MD and Cinemex AD have not filed Chapter 11 Petitions (collectively, 

“Non-Debtors”). 

Cinemex Holdings is jointly owned by Grupo Cinemex and Operadora de Cinemas S.A. de C.V. 

(“Operadora de Cinemas”), both Mexican corporations. Grupo Cinemex has a 66% ownership stake while 

Operadora de Cinemas has a 33% ownership stake. Grupo Cinemex owns 99.99% of Operadora de 

Cinemas. 

Cinemex Holdings is the holding company for the other U.S. entities and is the party that is the 

counterparty to MLAs with most of the film studios whose films are shown in Cinemex theaters. 

CB Theater is the entity that holds all but four of the leases for the premises that Cinemex USA 

leases. As to the remaining four leases, Cinemex Holdings and Cinemex Real Estate hold the lease for the 

premises located at Brickell City Center in Miami and in Wellington, Florida, respectively, while 

Cinemex MD and Cinemex AD hold the lease for premises in Maryland and New Jersey, respectively. 

The premises in New Jersey, located in the “American Dream” entertainment and retail complex in East 

Rutherford, New Jersey, is still under construction. Cinemex MD and Cinemex AD have no assets other 

than these leases. 

Cinemex Enterprises is the entity that employs personnel and is responsible for payroll, benefits 

(such as insurance) and employee-related obligations (such as payroll tax) for all Cinemex USA 

employees. Prior to filing for Chapter 11, Cinemex Holdings and CB Theater paid the expenses due by 

Cinemex Enterprises for payroll, payroll taxes and insurance, through intercompany transfers to Cinemex 

Enterprises. 

Figure 1 below depicts the corporate structure of Cinemex Holdings and its subsidiaries. 

 Figure 1: Cinemex USA Corporate Structure 

C. Prepetition Capital Structure 

The following table depicts the Debtors’ prepetition capital structure: 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 46 of 92
 36 

Debt Approx. Principal and Accrued Interest 

Outstanding (USD) 

Syndicated Bank Loan Facility 159.1 million 

General Unsecured Claims 39.3 million 

Intercompany Claims 61.9 million 

Total Debt $260.3 million 

1. Syndicated Bank Loan Facility 

Cinemex Holdings and CB Theater are parties to a Credit Agreement with Grupo Cinemex, S.A. 

de C.V., Operadora de Cinemas, S.A. de C.V., dated March 20, 2018 with BBVA Bancomer S.A. as the 

administrative agent and lender, HSBC Mexico, S.A., Scotiabank Inverlat, S.A., Banco Santander 

(Mexico), S.A. and Banco Mercantil del Norte S.A. (“Lenders”) under the USD facility totaling 

$45million (USD)(the “Syndicated Bank Loan”). Although the Syndicated Bank Loan aggregates these 

facilities with a larger facility of $2.814 billion (MXN) to Grupo Cinemex and Operadora de Cinemas 

S.A., the borrowing under the Syndicated Bank Loan occurred through separate promissory notes, and 

each lender under the Syndicated Bank Loan received a separate promissory note for its funded debt. 

Cinemex Holdings’ books and audited financials reflect five separate promissory notes with each of the 

Lenders for $9,000,000.00 for a total funded debt of $45,000,000.00. The larger $2.814 billion (MXN) 

syndicated loan is not reflected in the Amended Schedule F or the Debtors’ audited financials. However, 

the Syndicated Bank Loan includes Cinemex Holdings as Borrower and CB Theater as a Guarantor (as 

defined in the Credit Agreement) for the entirety of the Obligations (as defined in the Credit Agreement) 

including the $2.814 billion (MXN) facility. See Proof of Claim No. 25 filed in Case No. 20-14696-LMI, 

and Proof of Claim No. 35 filed in Case No. 20-14699-LMI. As of August 12, 2020, the MXN facility 

converts to approximately $126,117,852.00 of potential additional liability for Cinemex Holdings under 

the Syndicated Bank Loan and a contingent liability for CB Theater as Guarantor (in addition to the 

$45,000,000 represented by the promissory notes). The amount owed by Cinemex Holdings and CB 

Theater in respect of the Syndicated Bank Loan, as of the Petition Date, is $159,113,879.40. The Claims 

of the holders of Syndicated Bank Loan Claims are deemed allowed in this aggregate amount under the 

Plan. On March 31, 2020, Cinemex Holdings transferred $488,701.65 to BBVA Bancomer as agent for 

the Syndicated Bank Loan, representing a scheduled interest payment under the loan. The treatment of 

the Claims of the Holders of the Syndicated Bank Loan Claims under the Plan represents a good faith, 

arm’s length compromise and settlement between such Holders and the Debtors of all potential claims 

and causes of action, in order to facilitate consummation of the Plan. 

2. GUC Claims 

As of the Petition Date, the Debtors had approximately $39.3 million in principal and accrued 

interest outstanding of in respect of GUC Claims. The Debtors anticipate another $21.9 million in GUC 

Claims may result from the rejection of various leases in these Chapter 11 Cases. The sum of these two 

estimates is $61.2 million inclusive of “Litigation Claims” relating to the Khan Entities, discussed on pp. 

52-3 below. The range of possible GUC Claims is $50-60 million. The treatment of the Claims of the 

Holders of the GUC Claims under the Plan represents a good faith, arm’s length compromise and 

settlement between such Holders and the Debtors of all potential claims and causes of action, in order to 

facilitate consummation of the Plan. 

3. Convenience Claims 

As of the Petition date, the Debtors Claims in Class 5 totaled approximately $1,136,000. The 

Debtors established the Class of Convenience Claims in order to simplify administration of distributions 

under the Plan, and to facilitate a more expeditious distribution of Cash to the Holders of small claims. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 47 of 92
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As noted herein, Class 5 Claims are impaired, and under Bankruptcy Code section 1129, the affirmative 

vote of an impaired class may serve as the basis for confirmation of the Plan. 

4. Intercompany Claims 

As of the Petition Date, Intercompany Claims totaled approximately $61.9 million. Intercompany 

Claims consist of advances made to the Debtors by their shareholders or Affiliates of their shareholders. 

Under the Plan, Holders of Intercompany Claims will receive no distribution. The treatment of the Claims 

of the Holders of the Intercompany Claims under the Plan represents a good faith, arm’s length 

compromise and settlement between such Holders and the Debtors of all potential claims and causes of 

action, in order to facilitate consummation of the Plan. 

5. Interests in Cinemex Holdings 

As of the Petition Date, the Interests in Cinemex Holdings were held by Grupo Cinemex (c. 66%) 

and Operadora de Cinemas (c. 33%). The Interests in Cinemex Holdings are not publicly traded. Under 

the Plan, Holders of Interests will receive no distribution. The treatment of the Claims of the Holders of 

the Interests under the Plan represents a good faith, arm’s length compromise and settlement between 

such Holders and the Debtors of all potential claims and causes of action, in order to facilitate 

consummation of the Plan. 

6. Interests in Cinemex Holdings USA, Inc. and CB Theater Experience LLC 

As of the Petition Date, the interests in Cinemex USA Real Estate Holdings, Inc. and CB Theater 

Experience LLC were wholly owned by Cinemex Holdings USA, Inc. These Interests are not publicly 

traded. 

VI. EVENTS LEADING TO THE CHAPTER 11 FILINGS 

A. Adverse Market Conditions and Liquidity Constraints 

The difficulties faced by the Debtors are consistent with those faced industry-wide. As described 

herein, government stay at home orders related to the COVID-19 pandemic forced the Debtors – and all 

movie theater operators – to close their theaters in March 2020. Although some of the restrictions 

imposed by these stay at home orders have been modified, the Debtors still are unable to operate their 

theaters at a capacity to make them profitable. In addition, due to COVID-19, the Debtors have been 

unable to obtain new, first-run movies to show in their theaters, as the movie studios have not released 

any new first run movies. As a result, the Debtors have not generated any revenue from movie ticket 

sales, or sales of food and beverages at their theaters, since March 2020. 

B. Proactive Approach to Addressing Liquidity Constraints 

Since the Petition Date, the Debtors have been evaluating and re-evaluating all aspects of their 

business to improve efficiency and reduce costs. Most notably, the greatest impact (other than the rent 

reductions from the Lease renegotiations) include optimizing the man-hours needed to operate each 

theater, reducing film rental cost (which like lease expenses represent a significant part of the Debtors’ 

operating costs) and reducing the supplies and services expenses at each location. As a result of this 

ongoing analysis, the Debtors have implemented a number of initiatives designed to further this strategy. 

In addition, the Debtors are implementing the following initiatives: 

• New Bonus Structure for theater managers – Among other things, bonus will depend on 

theaters providing good service (which will be measured by mystery shoppers and surveys), and on 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 48 of 92
 38 

staffing the optimal man-hours for Back of House and Front of House positions. Such optimal man-hours 

will depend on the number of guests that each location receives per day. The savings on man-hours are 

expected to yield savings of $3 million per year (post-COVID). 

• Consolidating vendors – Several small providers of supplies and services are being 

consolidated, in order to reduce expenses in these categories 

The Debtors believe these efforts will improve efficiency and increase profits. 

VII. MATERIAL DEVELOPMENTS AND ANTICIPATED EVENTS OF THE CHAPTER 11 

CASES

A. First Day Relief 

Shortly after the Petition Date, the Debtors Filed several motions (the “First Day Motions”) 

designed to facilitate the administration of the Chapter 11 Cases and minimize disruption to the Debtors’ 

operations following the commencement of the Chapter 11 Cases. On April 30, 2020, the Bankruptcy 

Court entered orders approving the Debtors’ motion for joint administration (ECF No. 9) and extending 

the time for the Debtors to file their schedules of assets and liabilities and statements of financial affairs 

(ECF No. 10). 

On May 1, 2020, the Debtors filed (i) a motion seeking authorization to pay pre-petition sales 

taxes, franchise taxes and similar taxes and fees, (ii) a motion seeking approval of proposed adequate 

assurance of payment for future utility services and procedures for resolving adequate assurance requests, 

and (iii) a motion for authorization to continue to administer and honor premium financing agreements 

and obligations tor payment of insurance premiums. The Bankruptcy Court approved these motions on 

an interim basis by orders dated May 8, 2020. 

The First Day Motions, and all orders for relief granted in the Chapter 11 Cases, can be viewed 

free of charge at the website maintained by the Noticing Agent at 

https://cases.omniagentsolutions.com/Cinemex

B. Additional Chapter 11 Relief 

During the initial stage of the Chapter 11 Cases, the Debtors also filed the following motions: 

1. DIP Motions 

On May 5, 2020, the Debtors filed the Debtors Filed the Debtors’ Emergency Motion for 

Authorization to Obtain Post-Petition Unsecured Financing Pursuant to §§ 105, 361, 362 and 364; and (II) 

Scheduling a Final Hearing Under Bankruptcy Rule 4001 (ECF No. 58), requesting authority to borrow 

up to $1,920,000 from Grupo Cinemex. This motion was approved on an interim basis by order dated 

May 18, 2020 (ECF No. 114) and on a final basis by order dated June 5, 2020 (ECF No. 249). 

On June 1, 2020, the Debtors filed the Debtors Second Emergency Motion (I) For Authorization 

to Obtain Post-Petition Unsecured Financing Pursuant to §§ 105, 361, 362 and 364; and (II) Scheduling a 

Final Hearing Under Bankruptcy Rule 4001 (ECF No. 221), requesting authority to borrow up to $9.7 

million from Grupo Cinemex. The Debtors did not seek an interim order with respect to the second 

financing motion, which was approved on a final basis by order dated July 7, 2020 (ECF No. 363). 

The Debtors anticipate seeking an additional round of financing prior to confirmation. The terms 

of such financing are expected to be similar to those of the first two rounds. 

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2. Cash Management Motion 

On May 1, 2020, the Debtors Filed the Debtors’ Emergency Motion for an Order under Sections 

105, 345, 364, 364, 503, 1107 and 1108 of the Bankruptcy Code Authorizing (I) Maintenance of Existing 

Bank Accounts;(II) Continuance of Existing Cash Management System, Bank Accounts, Checks and 

Related Forms; (III) Continued Performance of Intercompany Transactional (IV) Limited Waiver of 

Section 345 Deposit and Investment Requirements; and (V) Granting Related Relief (ECF No. 40) (the 

“Cash Management Motion”). On May 8, 2020, the Court entered an interim order approving the Cash 

Management Motion, and by order dated June 1, 2020. A further hearing on this motion set for October 

2, 2020 was continued pending further order or notice from the Bankruptcy Court. 

3. Lease Rejection Motions 

The Debtors also Filed several other motions on the Petition Date seeking relief to facilitate their 

operation in the ordinary course, including: 

• First Lease Rejection Motion: On April 30, 2020, the Debtors filed a motion seeking to reject 

nine unexpired leases of real property (ECF No. 29). On May 8, 2020, the Bankruptcy Court 

entered an order approving the motion on an interim basis (ECF No. 72). On June 8, 2020, 

the Bankruptcy Court entered an order granting in part the relief request in this motion (ECF 

No. 270). On July 7, 2020, the Bankruptcy Court entered a subsequent order granting in part 

the relief request in this motion (ECF No. 373). 

• Second Lease Rejection Motion: On May 29, 2020, the Debtors filed a second motion 

seeking to reject two unexpired leases of real property (ECF No. 184). By agreement of the 

parties, this motion has been adjourned to August 21, 2020, to permit the parties additional 

time to negotiate. See ECF No. 431. 

• Third Lease Rejection Motion: On June 29, 2020, the Debtors filed a third motion seeking to 

reject three unexpired leases of real property (ECF No. 343). On July 15, 2020, the 

Bankruptcy Court entered an order approving this motion (ECF No. 395). 

• Fourth Lease Rejection Motion: On June 30, 2020, the Debtors filed a fourth motion seeking 

to reject one unexpired lease of real property (ECF No. 352). On July 10, 2020, the 

Bankruptcy Court entered an order approving this motion (ECF No. 393). On July 27, 2020, 

an agreed order (ECF No. 425) was entered vacating such order, as the Debtors and the 

landlord negotiated a lease amendment. 

• Fifth Lease Rejection Motion: On July 3, 2020, the Debtors filed a fifth motion seeking to 

reject one unexpired lease of real property (ECF No. 356). On August 4, 2020, the 

Bankruptcy Court entered an order approving this motion (ECF No. 452). 

• Sixth Lease Rejection Motion: On July 7, 2020, the Debtors filed a sixth motion seeking to 

reject one unexpired lease of real property (ECF No. 369). On July 30, 2020, the Bankruptcy 

Court entered an order approving this motion (ECF No. 443). 

• Seventh Lease Rejection Motion: On August 19, 2020, the Debtors filed a seventh motion 

seeking to reject one unexpired lease of real property (ECF No. 490). This matter is pending. 

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4. Motion to Abate Rent 

On May 12, 2020, the Debtors filed the Debtors’ Emergency Motion for Entry of an Order (I) 

Extending Time for Performance of Obligations Arising Under Unexpired Real Property Lease; (II) 

Establishing Temporary Case Administration Procedures; and (III) Granting Related Relief (ECF No. 

92) (the “Rent Abatement Motion”). In the Rent Abatement Motion, the Debtors’ posited that their 

obligation to pay rent under unexpired leases of real property during the first sixty days of the Chapter 11 

Cases should be suspended for “cause” due to the COVID-19 restrictions implemented by various state 

issued stay at home orders. The Debtors further asserted that the stay at home orders effected a taking of 

their property, relieving them of their obligations under the leases, and that the equitable grounds of 

supervening impossibility and frustration of purpose further supported such relief. The Rent Abatement 

Motion was opposed by a number of landlords. The Debtors have negotiated agreements with numerous 

landlords to resolve these disputes, and remain in discussions with several landlords. In July 2020, the 

Debtors agreed to withdraw the Rent Abatement Motion without prejudice as to nine landlords, and the 

hearing on the motion with respect to other landlords was adjourned to September 10, 2020. (See ECF 

No. 506). As of October 14, 2020, the motion was resolved as to all but one of the landlords, and the 

hearing on the Rent Abatement Motion was adjourned sine die. 

C. Other Procedural and Administrative Motions 

The Debtors also Filed several other motions to further facilitate the smooth and efficient 

administration of the Chapter 11 Cases and reduce the administrative burdens associated therewith, 

including: 

• Claims Agent Application. The Debtors’ Emergency Application for Order Appointing Omni 

Agent Solutions to Serve as Noticing, Balloting, and Administrative Agent for the Debtors 

Effective May 8, 2020 (ECF No. 180) (the “Claims Agent Application”), Filed on May 29, 

2020, seeking authorization to employ Omni Agent Solutions (“Omni”) to act as the 

Noticing, Balloting and Administrative Agent for the Debtors. On July 6, 2020, the 

Bankruptcy Court entered an order approving the Claims Agent Application on a final basis 

(ECF No. 297). 

• Interim Compensation Procedures Motion. The Debtors’ Motion for an Administrative Order 

Establishing Procedures for Interim Compensation and Reimbursement of Expenses of 

Professionals (ECF No. 289) (the “Interim Compensation Motion”), Filed on June 11, 2020, 

seeking approval of procedures for the interim compensation and reimbursement of expenses 

of retained Professionals in the Chapter 11 Cases. On June 29, 2020, the Bankruptcy Court 

entered an order approving the Interim Compensation Motion on a final basis (ECF No. 344). 

• Utilities Motion. The Debtors’ Emergency Motion for Interim and Final Orders (I) 

Approving the Debtors Proposed Adequate Assurance of Payment for Future Utility Services; 

(II) Prohibiting Utility Companies from Altering, Refusing or Discontinuing Services; (III) 

Approving the Debtors’ Proposed Procedures for Resolving Adequate Assurance Requests; 

and (IV) Granting Related Relief (the “Utilities Motion”) (ECF No. 42) was filed on May 1, 

2020. On June 5, 2020, 2020, the Bankruptcy Court entered an order approving the Utilities 

Motion (ECF No. 253). 

• Exclusivity Motion. The Debtors’ Motion to Extend Their Exclusive Periods to File 

a Chapter 11 Plan and Solicit Acceptances Thereof (ECF No. 460) (the “Exclusivity 

Motion”), was Filed on August 7, 2020, seeking to extend the Debtors’ exclusive 

period for filing a plan of reorganization through and including November 20, 2020, 

and the deadline under which the Debtors have the exclusive right to solicit 

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acceptances to a plan through and including January 19, 2021. On August 24, 2020, the 

Bankruptcy Court entered an order granting the Exclusivity Motion (ECF No. 509).

D. Retention of Professionals 

The Debtors Filed applications for, and the Bankruptcy Court entered orders approving, the 

retention of various professionals to assist the Debtors in carrying out their duties as debtors in possession 

and to represent their interests in the Chapter 11 Cases: 

• Quinn Emanuel Urquhart & Sullivan LLP, as co-counsel to the Debtors (ECF No. 252); 

• Bast Amron LLP, as co-counsel to the Debtors (ECF No. 251); 

• Province, Inc., as financial advisor (ECF No. 250); 

• Omni Agent Solutions, as notice and balloting agent (ECF No. 297); and 

• Deloitte Tax LLP, as tax advisor to the Debtors (ECF No. 548). 

E. Appointment of Official Creditors’ Committee; Retention of Committee 

Professionals 

On May 22, 2020, the U.S. Trustee Filed the Notice of Appointment of Committee of Unsecured 

Creditors (ECF No. 140), notifying parties in interest that the U.S. Trustee had appointed the Committee 

in the Chapter 11 Cases. The following creditors were appointed as Committee members: 

1. Allure Global Solutions, Inc.

 Attn: Will Logan 

 13100 Magisterial Drive, #100 

 Louisville, KY 40223 

2. Performance Food Group, Inc.

 Attn: Brad Boe 

 188 Inverness Drive, #700 

 Tulsa, OK 74146 

3. 1029 W. Addison Street Apartments Owner LLC

 Attn: John Bucksbaum 

 c/o Bucksbaum Retail Properties 

 71 S. Wacker Drive, #2310 

 Chicago, IL 60606 

The Committee has retained Pachulski Stang Ziehl & Jones LLP (“Pachulski”) and Berger 

Singerman, LLP (“Berger”) as its legal counsel, and FTI Consulting Inc. (“FTI”) as its financial advisor. 

Orders approving the retention of Pachulski (ECF No. 350) and Berger (ECF No. 349) were entered on 

June 30, 2020. An application to retain FTI was filed on July 7, 2020 (ECF No. 364), and an order 

approving that application was entered on August 7, 2020 (ECF No. 456). 

F. Rejection and Assumption of Executory Contracts and Unexpired Leases 

Prior to the Petition Date and in the ordinary course of business, the Debtors entered into certain 

Executory Contracts and Unexpired Leases. The Debtors, with the assistance of their advisors, reviewed 

the Executory Contracts and Unexpired Leases to identify contracts and leases to either assume or reject 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 52 of 92
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pursuant to sections 365 or 1123 of the Bankruptcy Code. As set forth above in Section II.B.3, the 

Debtors have concluded that certain Unexpired Leases were uneconomic, and have rejected or moved to 

reject such Unexpired Leases. The Debtors also moved for authority (but not the obligation) to assume 

master licensing agreements with thirty-nine (39) counterparties under contracts to provide content for the 

Debtors’ theaters. See ECF No. 397. The Bankruptcy Court granted this motion by order entered on 

August 3, 2020. See ECF No. 447. 

On September 11, 2020, September 18, 2020, and October 16, 2020, the Debtors filed the Notice 

of Executory Contracts and Unexpired Leases That May Be Assumed and Assigned in Connection with 

the Sale of the Debtors' Assets and the Proposed Cure Cost with Respect Thereto (ECF No. 537), the 

Supplemental Notice of Executory Contracts and Unexpired Leases That May Be Assumed and Assigned 

in Connection with the Sale of the Debtors' Assets and the Proposed Cure Cost with Respect Thereto 

(ECF No. 557) and the Second Supplemental Notice of Executory Contracts and Unexpired Leases That 

May Be Assumed and Assigned in Connection with the Sale of the Debtors' Assets and the Proposed Cure 

Cost with Respect Thereto (ECF No. 731) (collectively, the “Assumption Notices”), respectively, 

notifying creditors of the executory contracts and unexpired leases that may be assumed and assigned 

under the Plan, the proposed cure amount for each such contract or lease, and the steps a counterparty 

may take to protect its interests in respect of such contract or lease, including in respect of the proposed 

cure amount. On October 9, 2020 and October 16, 2020, the Debtors filed the Corrected Supplemental 

Notice to Provide Revised Cure Amounts (ECF No. 703) and the Second Corrected Supplemental Notice 

to Provide Revised Cure Amounts (ECF No. 730), respectively, notifying creditors of revisions to the 

Assumption Notices with respect to modifying certain proposed cure amounts. On October 16, 2020, the 

Debtors filed the Corrected Supplemental Notice to Remove Certain Executory Contracts and Unexpired 

Leases from the List of Designated Contracts (ECF No. 729), notifying creditors of revisions to the 

Assumption Notices with respect to removing certain executory contracts and unexpired leases. 

Pursuant to the Plan, the Debtors will be filing a Plan Supplement containing the Assumed 

Executory Contract and Unexpired Lease List, and Rejected Executory Contract and Unexpired Lease 

List. Any Assume/Reject Objection as relating to the Plan Supplement will be subject to the deadline 

established in the Disclosure Statement Order. 

Any Executory Contracts or Unexpired Leases not addressed during the Chapter 11 Cases will be 

treated in accordance with Article V of the Plan, as summarized in Article IV.N of this Disclosure 

Statement. 

G. Other Litigation Matters 

1. Prepetition Litigation 

In the ordinary course of business, the Debtors are parties to a number of lawsuits, legal 

proceedings, collection proceedings, and claims arising out of their business operations, including: 

• Star Cinema Litigation. On March 10, 2020, Cinemex entered into two related Equity 

Purchase Agreements (together, the “EPAs”) to purchase the equity interests in Star Cinema 

Grill, a Sugarland, Texas company wholly owned by Omar Khan (“Kahn”) that operated ten 

theaters located in Texas and Illinois. The EPAs contained several conditions to closing, 

which Cinemex asserted had not been satisfied. On April 2, 2020, Omar Khan, Star Cinema 

Grill, and various related entities filed a complaint against Debtors Cinemex USA Real Estate 

Holdings, Inc. and Cinemex Holdings USA, Inc. in the United States District Court for the 

Southern District of Texas (the “District Court”). The complaint alleged that Debtors 

breached the EPAs by failing to close the transaction, and sought specific performance of the 

Agreement. On April 23, 2020, the Debtors filed a motion to dismiss the complaint. The 

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Debtors commenced the Chapter 11 Cases on April 25 and 26, 2020, and on April 27, 2020, 

the District Court entered an order staying the litigation. 

Star Cinema Grill and Kahn have filed the following proofs of claims in the Chapter 11 Case 

of Cinemex USA Real Estate Holdings, Inc., asserting damages underlying the Star Cinema 

Litigation: 

a. Proof of Claim No. 85-1, filed by Omar Kahn against Cinemex Holdings and CB Theater 

Experience LLC in the amount of $82,970,000.00, based on an alleged breach of the 

EPAs. 

b. Proof of Claim No. 85-2, filed by Omar Kahn against Cinemex Holdings and CB Theater 

Experience LLC in the amount of $82,970,000.00, based on an alleged breach of the 

EPAs. This Proof of Claim amended Proof of Claim 85-1. 

c. Proof of Claim No. 87-1, filed by S.C.G.C. Inc. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

d. Proof of Claim No. 87-2, filed by S.C.G.C. Inc. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. This Proof of Claim amended Proof of Claim 87-1. 

e. Proof of Claim No. 89-1, filed by S.C.G.M. Inc. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

f. Proof of Claim No. 89-2, filed by S.C.G.M. Inc. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. This Proof of Claim amended Proof of Claim 89-1. 

g. Proof of Claim No. 91-1, filed by SCG-B Inc. against Cinemex Holdings and CB Theater 

Experience LLC in the amount of $26,079,214.65, based on an alleged breach of the 

EPAs. 

h. Proof of Claim No. 91-2, filed by SCG-B Inc. against Cinemex Holdings and CB Theater 

Experience LLC in the amount of $26,079,214.65, based on an alleged breach of the 

EPAs. This Proof of Claim amended Proof of Claim 91-1. 

i. Proof of Claim No. 94-1 filed by SCG-VP Inc. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

j. Proof of Claim No. 99-1 filed by District Inc. against Cinemex Holdings and CB Theater 

Experience LLC in the amount of $26,079,214.65, based on an alleged breach of the 

EPAs. This Proof of Claim was subsequently withdrawn (ECF No. 374). 

k. Proof of Claim No. 100-1 filed by SCG-WR, Inc. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. This Proof of Claim was subsequently withdrawn (ECF No. 375). 

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l. Proof of Claim No. 101-1 filed by SCG−CS LLC against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. This Proof of Claim was subsequently withdrawn (ECF No. 376). 

m. Proof of Claim No. 102-1 filed by SCGK INC. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

n. Proof of Claim No. 103-1 filed by SCG−SW INC. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

o. Proof of Claim No. 104-1 filed by SCG−WL INC. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

p. Proof of Claim No. 105-1 filed by SCG−N INC. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

q. Proof of Claim No. 108-1 filed by SCG−CS INC. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

r. Proof of Claim No. 109-1 filed by SCG−CS INC. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

s. Proof of Claim No. 110-1 filed by SCG-WR LLC. against Cinemex Holdings and CB 

Theater Experience LLC in the amount of $26,079,214.65, based on an alleged breach of 

the EPAs. 

Each of these Proofs of Claims listed Omar Khan as the person to whom payments should be sent. 

Khan and these entities, which are wholly-owned by Khan (collectively, the “Khan Parties”), also filed 

duplicates of these claims in the Cinemex Holdings and CB Theater Experience Chapter 11 cases. 

The Debtors believe these Claims are vastly overstated and duplicative, and on August 18, 2020, filed an 

objection to the Claims. See ECF No. 482. The Khan Parties filed a response to the objection to these 

Claims on September 17, 2020. See ECF No. 550. 

2. Postpetition Litigation 

• MN Theaters Litigation – Prepetition, Debtor CB Theater Experience LLC was a party to two 

leases with MN Theaters 2006, LLC (“MN Theaters”). Grupo Cinemex entered into 

guaranties in connection those leases. On June 8, 2020, the Court entered an order approving 

rejection of those leases effective as of April 30, 2020. On or about July 28, 2020, MN 

Theaters filed a complaint against Grupo Cinemex in the United States District Court for the 

Southern District of New York. MN Theaters 2006 LLC v. Grupo Cinemex, S.A. de C.V., 

Case No. 20-cv-5860 (the “District Court Case”). In the District Court Case, MN Theaters 

seeks a judgment of over $56,318,226.94 against Grupo Cinemex for breach of the guaranties 

for unpaid rent, improvements, and enforcement costs under the Leases. MN Theaters also 

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sought and obtained a prejudgment attachment on an ex parte basis over not only Grupo 

Cinemex’s ownership of Debtor Cinemex Holdings USA, Inc., but also over any funds that 

Grupo Cinemex has provided or may provide to the Debtors in these bankruptcy cases, 

including the debtor-in-possession loans. On August 17, 2020, the Debtors filed an adversary 

complaint for injunctive relief in these bankruptcy cases (Adv. Proc. No. 20-01310-LMI), 

together with an Emergency Motion for an Order (I) Declaring that the Automatic Stay 

Applies to MN Theaters' Act of Attaching the Debtor-in-Possession Loans and (II) Granting 

Preliminary Injunction Temporarily Enjoining the Prosecution of the District Court Case 

Against the Non-Debtor Defendant (ECF No. 2). On September 25, 2020, the Bankruptcy 

Court entered an order granting in part and denying in part the request for emergency relief, 

holding that “the proceedings in the District Court Case up to and including entry of the 

Attachment Order did not constitute violations of the automatic stay under section 362 of the 

Bankruptcy Code” and that 

any continuation of proceedings in the District Court Case to confirm 

the Attachment Order or to take any other act that provides MN 

Theaters with increased rights, in each case with respect to (i) Grupo 

Cinemex S.A. de C.V.’s (“Grupo”) interest in the First DIP Loan and 

Second DIP Loan, and (ii) Grupo’s ownership interest in Cinemex 

Holdings USA, Inc. (the “Stock”), or any other action in the District 

Court Case to determine what is property of the Debtors’ estate is 

subject to the automatic stay. 

ECF No. 24. The Court also denied without prejudice Debtors’ motion for a preliminary injunction. Id. 

• Windstream Dispute – Windstream Services, LLC and its affiliates (collectively, 

“Windstream”) claim to have provided services to the Debtors during the Chapter 11 cases 

pursuant to the agreements between the parties: (a) the Customer Service Agreement entered 

into on or about March 28, 2013 (together with all addendums and agreements thereto and as 

amended from time to time); and (b) the Dynamic IP Agreement for the Cinebistro at Liberty 

entered into on or about August 17, 2015 (together with all addendums and agreements 

thereto and as amended from time to time). Windstream is scheduled as a Utility Provider 

under the Utilities Order entered by the Bankruptcy Court on July 30, 2020. [ECF No. 442]. 

The Debtors have not made any payments to Windstream during the Chapter 11 cases. On 

September 25, 2020, Windstream filed an Application for Allowance of Administrative 

Claims [ECF No. 596] asserting administrative priority claims against the Debtors in the 

aggregate amount of $328,687.20. The Debtors dispute that services were provided that 

benefitted the estate, and accordingly dispute the amount and validity of the administrative 

priority claims asserted by Windstream. At present, Windstream and the Debtors are 

attempting to resolve the dispute on a consensual basis. 

The Debtors cannot predict with certainty the outcome of any lawsuits, legal proceedings, and 

claims, to the extent they remain unresolved. 

3. Automatic Stay Motions 

With certain exceptions, the Filing of the Chapter 11 Cases operates as a stay with respect to 

the commencement or continuation of litigation against the Debtors that was or could have been 

commenced before the commencement of the Chapter 11 Cases. In addition, the Debtors’ liability with 

respect to litigation stayed by the commencement of the Chapter 11 Cases generally is subject to 

discharge, settlement, and release upon confirmation of a plan under chapter 11, with certain exceptions. 

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Therefore, certain litigation Claims against the Debtors may be subject to discharge in connection with 

the Chapter 11 Cases. 

Following commencement of the Chapter 11 Cases, certain litigation counterparties have Filed, or 

may File in the future, requests to modify or lift the automatic stay to continue pursuing prepetition 

litigation against the Debtors or the Debtors’ counterparties or to effectuate certain contractual rights, 

including: 

• Sherman Williams Lift Stay Motion. On May 19, 2020, the Bankruptcy Court Filed as a 

motion (ECF No. 129) seeking relief from the automatic stay correspondence received from 

pro se claimant Sherman Williams (the “Williams Lift Stay Motion”). By order entered June 

26, 2020, the Bankruptcy Court denied the Williams Lift Stay Motion without prejudice. See 

ECF No. 332. 

• United Stipulation and Lift Stay Motion. On May 26, 2020, the Debtors and 

UnitedHealthcare Insurance Company and Neighborhood Health Partnership, Inc. (together 

with UnitedHealthcare Insurance Company, “United”) Filed a joint motion (ECF No. 152) 

seeking approval of a stipulation between the Debtors and United, which – among other 

things – provided United with stay relief to terminate certain group health insurance policies 

with the Debtors if the Debtors failed to make payments under the stipulation (the “United 

Stipulation and Lift Stay Motion”). By order entered on July 6, 2020, the Bankruptcy Court 

entered an order granting the United Stipulation and Lift Stay Motion. See ECF No. 358. 

• Linda Baron Lift Stay Motion. On July 9, 2020, Linda Baron Filed a motion (ECF No. 384) 

seeking relief from the automatic stay (the “Baron Lift Stay Motion”). By agreed order 

entered on July 24, 2020, the Bankruptcy Court lifted the stay to permit Ms. Baron to pursue 

her claim against insurance proceeds only. See ECF No. 407. 

• Crescent Electric Supply Co. Lift Stay Motion. On August 2, 2020, Crescent Electric Supply 

Co. (“Crescent”) Filed a motion (ECF No. 446) seeking relief from the automatic stay on an 

unopposed basis (the “Crescent Lift Stay Motion”). By agreed order entered on August 17, 

2020, the Bankruptcy Court lifted the stay to permit Crescent to pursue its foreclosure action 

and seek recovery from non-debtor obligors, with Crescent agreeing to waive its monetary 

claims against the Debtors. See ECF No. 447. 

• VCC Lift Stay Motion. On August 19, 2020, VCC, LLC Filed a motion (ECF No. 493) 

seeking relief from the automatic stay to enforce its asserted mechanic’s lien on the real 

property at 1025 W. Addison, Chicago, IL 60613 (the “VCC Lift Stay Motion”). The 

Debtors’ lease relating to that location was rejected by an order entered on May 8, 2020 (ECF 

No. 72). The Debtors are evaluating how to respond to the VCC Lift Stay Motion. 

• Cynthia Moss Stay Motion. On October 5, 2020, the Bankruptcy Court Filed as a motion 

(ECF No. 692) correspondence received from pro se claimant Cynthia Moss (the “Moss Lift 

Stay Motion”). By agreed order entered October 13, 2020, the Bankruptcy Court granted the 

Moss Lift Stay Motion to permit collection from insurance proceeds. See ECF No. 709. 

The Debtors will evaluate all requests for relief from the automatic stay on a case-by-case basis 

and object or resolve on a consensual basis, as appropriate. 

In addition, certain parties may attempt to take actions in violation of the automatic stay. The 

Debtors will evaluate all such actions on a case-by-case basis and object or resolve on a consensual basis, 

as appropriate. To date, the Debtors have Filed only one action related to violations of the automatic stay: 

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Cinemex USA Real Estate Holdings, Inc., et al. v. MN Theaters 2006 LLC, Adv. Proc. No. 20-01310-LMI 

(Bankr. S.D. Fla.) (the “MN Theaters Proceeding”). In the MN Theaters Proceeding, the Debtors are 

seeking to enforce the automatic stay against all claims pursued by MN Theaters 2006 LLC (“MN 

Theaters”) against Grupo Cinemex in the pending action captioned as MN Theaters 2006 LLC v. Grupo 

Cinemex, S.A. de C.V., Case No 20 CV 5860 (S.D.N.Y.)(Castel, J.) because – among other things – MN 

Theaters therein obtained an attachment order against the DIP Loan and its proceeds. See ECF No. 1 in 

Adv. Proc. No. 20-01310-LMI. 

H. Postpetition Restructuring and Sale Process 

Following the Petition Date, the Debtors continued to engage with their stakeholders, including 

the Committee, the DIP Lenders, their landlords, and their other prepetition unsecured creditors, to 

develop a go-forward path based on a reorganization of their business under a chapter 11 plan. 

1. Marketing Process 

The Debtors engaged in a dual-track restructuring, pursuant to which they conducted a robust 

marketing process for some or all of their assets while engaging in negotiations with creditors to 

reorganize their business under a chapter 11 plan. In early July 2020, Province compiled an initial list of 

potential buyers and sent the list to the Committee’s financial adviser, FTI, for their review. 

Beginning on July 20, 2020, Province, the Debtors’ financial advisor sent teasers to 12 potential 

strategic buyers in the theater industry, 20 strategic, non-theater buyers and 31 potential financial buyers. 

Below is a chart that shows the statistics for each group of potential buyers. 

Potential Bidder 

Type 

Teaser Sent Signed NDA Data Room Accessed LOI or IOI Received 

Theater Strategic 12 8 8 1 

Non-Theater Strategic 20 3 3 1 

Financial 31 5 5 0 

TOTAL 63 16 16 2 

 Via email and during phone calls, Province described the opportunity including renegotiated 

leases significantly lowering operating expense profile, the key selling points of the Debtors’ food and 

beverage program, and the relatively low upfront capital outlay for buyers as a Stalking Horse bidder. By 

the end of July 2020, Province prepared and populated an online data room with relevant materials on the 

Debtors’ business. The data room provides potential purchasers with information regarding the Debtors’ 

business, operations and assets. Each of the bidders that has executed an NDA has entered the data room 

and accessed the Debtors’ company information. 

In August, Province had calls with five additional potential buyers and sent each of them a teaser 

and NDA. Each week in August, Province solicited responses by email and by phone from bidders that 

did not respond to initial emails and phone calls. By mid-August 2020, Province prepared a Confidential 

Information Memorandum with Management, including a set of financial projections. By the end of 

August 2020, Province had reached out to 63 potential bidders. 

In furtherance of the sale process, on August 5, 2020, the Debtors Filed the Debtors’ Motion for 

Entry of an Order Approving (A) Bidding Procedures for the Sale of Substantially all of any Portion of 

the Debtors’ Assets, (B) Procedures for the Debtors’ Assumption and Assignment of Certain Executory 

Contracts and Unexpired leases, (C) the Form and Manner of Notice of the Sale Hearing and Assumption 

Procedures, (D) Procedures for Selection of One or More Stalking Horse Bidders, and (E) Dates for an 

Auction and Sale Hearing (the “Bid Procedures Motion”) (ECF No. 471). The Bid Procedures Motion 

sought (i) entry of an order in the form of Exhibit A thereto (the “Bidding Procedures Order”) (a) 

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approving the proposed bidding procedures attached as Annex 1 to the Bidding Procedures Order (the 

“Bidding Procedures”) by which the Debtors will solicit and select the highest or otherwise best offer for 

the sale of substantially all or any portion or combination of their assets, including new equity in 

Holdings issued pursuant to a plan of reorganization (the “Assets”) through one or more sales of the 

Assets (each, a “Transaction”); (b) establishing procedures for the assumption and assignment of 

executory contracts and unexpired leases, including notice of proposed cure amounts (the “Assumption 

and Assignment Procedures”); (c) approving the form and manner of notice of the Auction (defined 

below) and sale hearing (the “Sale Notice”) and Assumption and Assignment Procedures (the 

“Assumption Notice”), (d) approving the procedures governing the Debtors’ selection of one or more 

stalking horse bidders (each, a “Stalking Horse Bidder”), if any, and the provision of Bid Protections 

(defined therein) to such Stalking Horse Bidder(s), if necessary; and (e) scheduling (1) a date for an 

auction if the Debtors receive one or more timely and acceptable Qualified Bids (defined below) (the 

“Auction”) and (2) a final hearing (the “Sale Hearing”) to approve one or more Transactions, as 

necessary, and (f) granting related relief. 

The Bid Procedures Motion was approved at a hearing on August 21, 2020, and the corrected 

Bidding Procedures Order was entered on September 2, 2020 (ECF No. 522). By September 4, 2020 (the 

initial Stalking Horse bid deadline), Province had received two Stalking Horse bid proposals – one from 

Wine and Roses, S.A. de C.V. (“Wine & Roses”) and one from CSC Coliving (“CSC”). In connection 

with the Bidding Procedures, the Debtors appointed Peter Hurwitz of Dundon Advisors as a Disinterested 

Director. On September 25, 2020, the Debtors created a special committee consisting solely of the 

Disinterested Director to make all decisions concerning the implementation of the Bidding Procedures, 

the selection of the Stalking Horse Bid, the selection of the Winning Bidder, and any other conflict matter 

that arose in connection with the Bankruptcy Cases. 

The original bid from Wine & Roses provided consideration sufficient to pay all amounts needed 

to confirm a plan of reorganization, plus $5 million for all unsecured creditors. The CSC letter of intent 

offered $3 million for an asset sale transaction contingent on converting 25 theater leases to “esports” 

platforms. As reflected in the Liquidation Analysis, $3 million would be insufficient to retire 

administrative claims. In addition, CSC did not provide any analysis of how existing theater leases could 

be converted to esports platforms under the existing use clauses in the leases. 

After acceptance of the W&R Stalking Horse bid, Province contacted all 61 potential bidders 

(other than W&R and CSC) to ascertain their interest in overbidding to the W&R Stalking Horse bid. The 

result of that effort yielded 2 additional interested parties. However, those parties did not submit any LOI 

or IOI despite the extension of the overbid deadline to October 22, 2020. 

In addition, after receipt of the Wine & Roses letter of intent, the Committee and Wine & Roses 

engaged in multiple rounds of negotiations that resulted in the proposal now made part of the Plan. As 

compared to the original Wine & Roses proposal that proposed a 2.3% payout to general unsecured 

creditors, the Plan now provides an estimated 15% to Holders of non-bank GUC Claims. 

Following the exhaustive efforts by Province detailed above, the Debtors, through the 

Disinterested Director, determined that the highest and best bid to acquire the New Common Stock was 

submitted by Wine & Roses. Wine & Roses is an affiliate of the Debtors, as both Wine & Roses and the 

Debtors are affiliates of Entretenimiento GM de Mexico SA de CV. The ownership of the Debtors is 

illustrated in Exhibit B, and the ownership of Wine & Roses is illustrated in the diagram below: 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 59 of 92
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The Plan is premised on the sale of the New Common Stock to Wine & Roses, as set forth in the 

Stock Purchase Agreement. 

2. Negotiations with Creditors 

In parallel with their marketing process, the Debtors continued to engage with all key 

stakeholders regarding the terms of a consensual plan of reorganization in the event the Debtors were 

unable or elect not to sell substantially all of their assets, or propose a plan based on a purchase of New 

Common Stock by Grupo Cinemex. To that end, the Debtors facilitated extensive formal and informal 

discussions with their landlords and certain trade creditors. These discussions led the Debtors to file on 

July 17, 3030 the Debtors’ Motion to Assume Master Licensing Agreements and Cure Monetary Defaults, 

or in the Alternative, for Authority to Pay all or a Portion of the Prepetition Claims of Certain Critical 

Vendors (ECF No. 397). The Bankruptcy Court approved this motion by order dated July 30, 2020 (ECF 

447), thereby granting the Debtors authority to enter into individual critical vendor stipulations with 

certain counterparties to master licensing agreements, which may include, among other terms, the Debtors 

paying all or a portion of pre-petition claims owed by the Debtors to the counterparties as critical vendors 

up to the amounts set forth in the exhibit to the order. The Debtors continue to engage in negotiations and 

discussions with their creditors. 

I. Expected Timetable of the Chapter 11 Cases 

The Debtors expect they will emerge from chapter 11 by the end of November 2020. 

No assurances can be made, however, that the Bankruptcy Court will enter various orders on the 

timetable anticipated by the Debtors.

VIII. RISK FACTORS 

Holders of Claims should read and consider carefully the risk factors set forth below before 

voting to accept or reject the Plan. Although there are many risk factors discussed below, these factors 

should not be regarded as constituting the only risks present in connection with the Debtors’ business or 

the Plan and its implementation. 

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A. Bankruptcy Law Considerations 

The occurrence or non-occurrence of any or all of the following contingencies, and any others, 

could affect distributions available to Holders of Allowed Claims under the Plan but will not necessarily 

affect the validity of the vote of the Impaired Classes to accept or reject the Plan or necessarily require a 

re-solicitation of the votes of Holders of Claims in such Impaired Classes. 

1. Parties in Interest May Object to the Plan’s Classification of Claims and 

Interests 

Section 1122 of the Bankruptcy Code provides that a plan may place a claim or an equity interest 

in a particular class only if such claim or equity interest is substantially similar to the other claims or 

equity interests in such class. The Debtors believe that the classification of the Claims and Interests under 

the Plan complies with the requirements set forth in the Bankruptcy Code because the Debtors created 

Classes of Claims and Interests each encompassing Claims or Interests, as applicable, that are 

substantially similar to the other Claims or Interests, as applicable, in each such Class. Nevertheless, 

there can be no assurance that the Bankruptcy Court will reach the same conclusion. 

2. The Conditions Precedent to the Effective Date of the Plan May Not Occur 

As more fully set forth in Article IX of the Plan, the Confirmation Date and the Effective Date of 

the Plan are subject to a number of conditions precedent. If such conditions precedent are not met or 

waived, the Confirmation Date or the Effective Date will not take place. 

3. The Debtors May Fail to Satisfy Vote Requirements 

If votes are received in number and amount sufficient to enable the Bankruptcy Court to confirm 

the Plan, the Debtors intend to seek, as promptly as practicable thereafter, Confirmation of the Plan. In 

the event that sufficient votes are not received, the Debtors may seek to confirm an alternative chapter 11 

plan or proceed with a sale of all or substantially all of the Debtors’ assets pursuant to section 363 of the 

Bankruptcy Code. There can be no assurance that the terms of any such alternative chapter 11 plan or 

sale pursuant to section 363 of the Bankruptcy Code would be similar or as favorable to the Holders of 

Allowed Claims as those proposed in the Plan. 

4. The Debtors May Not Be Able to Secure Confirmation of the Plan 

There can be no assurance that the requisite acceptances to confirm the Plan will be received. 

Even if the requisite acceptances are received, there can be no assurance that the Bankruptcy Court will 

confirm the Plan. A non-accepting Holder of an Allowed Claim might challenge either the adequacy of 

this Disclosure Statement or whether the balloting procedures and voting results satisfy the requirements 

of the Bankruptcy Code or Bankruptcy Rules. Even if the Bankruptcy Court determines that this 

Disclosure Statement, the balloting procedures, and the voting results are appropriate, the Bankruptcy 

Court could still decline to confirm the Plan if it finds that any of the statutory requirements for 

Confirmation are not met. If a chapter 11 plan of reorganization is not confirmed by the Bankruptcy 

Court, it is unclear whether the Debtors will be able to reorganize their business and what, if anything, 

Holders of Allowed Claims against them would ultimately receive on account of such Allowed Claims. 

Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation of a chapter 11 

plan, and requires, among other things, a finding by the Bankruptcy Court that: (a) such plan “does not 

unfairly discriminate” and is “fair and equitable” with respect to any non-accepting classes; 

(b) confirmation of such plan is not likely to be followed by a liquidation or a need for further financial 

reorganization unless such liquidation or reorganization is contemplated by the plan; and (c) the value of 

distributions to non-accepting Holders of claims and equity interests within a particular class under such 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 61 of 92
 51 

plan will not be less than the value of distributions such Holders would receive if the Debtors were 

liquidated under chapter 7 of the Bankruptcy Code. 

Confirmation of the Plan is also subject to certain conditions as described in Article IX of the 

Plan. If the Plan is not confirmed, it is unclear what distributions, if any, Holders of Allowed Claims will 

receive on account of such Allowed Claims. 

The Debtors, subject to the terms and conditions of the Plan, reserve the right, upon reasonable 

prior notice to and in consultation with the Committee, to modify the terms and conditions of the Plan as 

necessary for Confirmation. Any such modifications could result in less favorable treatment of any nonaccepting Class, as well as any Class junior to such non-accepting Class, than the treatment currently 

provided in the Plan. Such a less favorable treatment could include a distribution of property with a lesser 

value than currently provided in the Plan or no distribution whatsoever under the Plan. 

5. Nonconsensual Confirmation 

In the event that any impaired class of claims or interests does not accept a chapter 11 plan, a 

bankruptcy court may nevertheless confirm a plan at the proponents’ request if at least one impaired class 

(as defined under section 1124 of the Bankruptcy Code) has accepted the plan (with such acceptance 

being determined without including the vote of any “insider” in such class), and, as to each impaired class 

that has not accepted the plan, the bankruptcy court determines that the plan “does not discriminate 

unfairly” and is “fair and equitable” with respect to the dissenting impaired class(es). The Debtors 

believe that the Plan satisfies these requirements, and the Debtors may request such nonconsensual 

Confirmation in accordance with subsection 1129(b) of the Bankruptcy Code. Nevertheless, there can be 

no assurance that the Bankruptcy Court will reach this conclusion. In addition, the pursuit of 

nonconsensual Confirmation or Consummation of the Plan may result in, among other things, increased 

expenses relating to professional compensation. 

6. The Chapter 11 Cases May Be Converted to Cases under Chapter 7 of the 

Bankruptcy Code 

If the Bankruptcy Court finds that it would be in the best interest of creditors and/or the debtor in 

a chapter 11 case, the Bankruptcy Court may convert a chapter 11 bankruptcy case to a case under 

chapter 7 of the Bankruptcy Code. In such event, a chapter 7 trustee would be appointed or elected to 

liquidate the debtor’s assets for distribution in accordance with the priorities established by the 

Bankruptcy Code. The Debtors believe that liquidation under chapter 7 would result in significantly 

smaller distributions being made to creditors than those provided for in a chapter 11 plan because of 

(a) the likelihood that the assets would have to be sold or otherwise disposed of in a disorderly fashion 

over a short period of time rather than reorganizing or selling in a controlled manner affecting the 

business as a going concern, (b) additional administrative expenses involved in the appointment of a 

chapter 7 trustee, and (c) additional expenses and Claims, some of which would be entitled to priority, 

that would be generated during the liquidation, including Claims resulting from the rejection of 

Unexpired Leases and Executory Contracts. 

7. The Debtors May Object to the Amount or Classification of a Claim 

Except as otherwise provided in the Plan, the Debtors reserve the right to object to the amount or 

classification of any Claim under the Plan. The estimates set forth in this Disclosure Statement cannot be 

relied upon by any Holder of a Claim, as the Debtors may seek to investigate, File, and prosecute Claims 

and may object to Claims after the Confirmation or Effective Date of the Plan irrespective of whether this 

Disclosure Statement identifies any such Claims or objections to Claims such Claim is subject to an 

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objection. Any Holder of a Claim thus may not receive its expected share of the estimated distributions 

described in this Disclosure Statement. 

8. Contingencies Could Affect Votes of Impaired Classes to Accept or Reject 

the Plan 

The distributions available to Holders of Allowed Claims under the Plan can be affected by a 

variety of contingencies, including, without limitation, whether the Bankruptcy Court orders certain 

Allowed Claims to be subordinated to other Allowed Claims. The occurrence of any and all such 

contingencies, which could affect distributions available to Holders of Allowed Claims under the Plan, 

will not affect the validity of the vote taken by the Impaired Classes to accept or reject the Plan or require 

any sort of revote by the Impaired Classes. 

The estimated Claims and creditor recoveries set forth in this Disclosure Statement are based on 

various assumptions, and the actual Allowed amounts of Claims may significantly differ from the 

estimates. Should one or more of the underlying assumptions ultimately prove to be incorrect, the actual 

Allowed amounts of Claims may vary from the estimated Claims contained in this Disclosure Statement. 

Moreover, the Debtors cannot determine with any certainty at this time, the number or amount of Claims 

that ultimately will be Allowed. Such differences may materially and adversely affect, among other 

things, the percentage recoveries to Holders of Allowed Claims under the Plan. 

The Plan compromises several of the larger claims that could affect estimated distributions to 

Allowed GUC Claims, particularly the Syndicated Bank Loan Claims ($159 million) and the 

Intercompany Claims ($60 million). One unresolved group of claims that may significantly affect 

distributions consists of claims filed by entities related to Omar Khan (the “Khan Entities”) relating to the 

termination of the Equity Purchase Agreement between the Omar Khan and Cinemex Holdings and 

Cinemex USA Real Estate Holdings, Inc. Specifically, the following chart represents the Debtors’ 

analysis of the claims filed by the Khan Entities: 

Claim 

No. 

Name of Claimant Amount of 

Claim 

Basis for Objection Recommended 

Disposition 

28-2 Omar Khan $82,970,000.00 Debtors not liable Disallow 

85-2 Omar Khan $82,970,000.00 Duplicative; CB Theater not 

liable 

Disallow 

29-2 S.C.G.C. Inc. $26,079,214.65 Duplicative Disallow 

87-2 S.C.G.C. Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

30-2 S.C.G.M. Inc. $26,079,214.65 Duplicative Disallow 

89-2 S.C.G.M. Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

31-2 SCG-B Inc. $26,079,214.65 Duplicative Disallow 

91-2 SCG-B Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

39 SCG-VP, Inc. $26,079,214.65 Duplicative Disallow 

94 SCG-VP, Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

50 District Theaters, Inc. $26,079,214.65 Duplicative Disallow 

109 District Theaters, Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

49 SCG-WR LLC $26,079,214.65 Duplicative Disallow 

110 SCG-WR LLC $26,079,214.65 Duplicative; CB Theater not Disallow 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 63 of 92
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liable 

51 SCG-CS Inc. $26,079,214.65 Duplicative Disallow 

108 SCG-CS Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

45 SCGK Inc. $26,079,214.65 Duplicative Disallow 

102 SCGK Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

46 SCG-SW Inc. $26,079,214.65 Duplicative Disallow 

103 SCG-SW Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

47 SCG-WL Inc. $26,079,214.65 Duplicative Disallow 

104 SCG-WL Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

48 SCG-N Inc. $26,079,214.65 Duplicative Disallow 

105 SCG-N Inc. $26,079,214.65 Duplicative; CB Theater not 

liable 

Disallow 

For purposes of calculating estimated distributions, the Debtors estimate the allowable claim of 

the Khan Entities at $10 million, or roughly 20% of the GUC Claims pool. If the Claims of the Khan 

Entities are allowed in full, the Pro Rata distribution to Holders of GUC Claims could be significantly 

reduced to less than 7% on the Claim dollar. 

9. Releases, Injunctions, and Exculpations Provisions May Not Be Approved 

Article VIII of the Plan provides for certain releases, injunctions, and exculpations, including a 

release of liens and third party releases that may otherwise be asserted against the Debtors, the 

Reorganized Debtors, or the Released Parties. The releases, injunctions, and exculpations provided in the 

Plan are subject to objection by parties in interest and may not be approved. 

10. Risk of Non-Occurrence of the Effective Date 

Although the Debtors believe that the Effective Date may occur quickly after the Confirmation 

Date, there can be no assurance as to such timing or as to whether the Effective Date will, in fact, occur. 

If the Effective Date does not occur, the Plan shall be null and void in all respects and nothing contained 

in the Plan or this Disclosure Statement shall: (a) constitute a waiver or release of any Claims by or 

Claims against or Interests in the Debtors; (b) prejudice in any manner the rights of the Debtors, any 

Holder of a Claim or Interest, or any other Entity; (c) constitute an admission, acknowledgment, offer, or 

undertaking by the Debtors, any Holders of Claims or Interests, or any other Entity in any respect; or (d) 

be used by the Debtors or any Entity as evidence (or otherwise) in any litigation, including with regard to 

the strengths or weaknesses of any of the parties’ positions, arguments, or claims. 

11. Risk of Loss of Exclusive Right to Propose a Plan 

At the outset of the Chapter 11 Cases, the Bankruptcy Code provides the Debtors with the 

exclusive right to propose a plan and prohibits creditors and others from proposing a plan. If the 

Bankruptcy Court terminates that right, however, or the exclusivity period expires, there could be a 

material adverse effect on the Debtors’ ability to achieve confirmation of the Plan in order to achieve the 

Debtors’ stated goals. 

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12. Continued Risk upon Confirmation 

Even if the Plan is consummated, the Reorganized Debtors will continue to face a number of 

risks, including certain risks that are beyond their control, such as further deterioration or other changes in 

economic conditions, changes in the movie theater industry, potential revaluing of their assets due to 

chapter 11 proceedings, changes in consumer demand for in-theater movie viewing, and increasing 

expenses. Some of these concerns and effects typically become more acute when a case under the 

Bankruptcy Code continues for a protracted period without indication of how or when the case may be 

completed. As a result of these risks and others, there is no guarantee that a chapter 11 plan of 

reorganization reflecting the Plan will achieve the Debtors’ stated goals. 

Further, even if the Debtors’ debts are reduced and/or discharged through the Plan, the 

Reorganized Debtors may need to raise additional funds through public or private debt or equity financing 

or other various means to fund the Debtors’ business after the completion of the proceedings related to the 

Chapter 11 Cases. Adequate funds may not be available when needed or may not be available on 

favorable terms. 

B. Risks Related to the Debtors’ Operations During and After These Chapter 11 Cases 

The Debtors face substantial risks for the duration of the Chapter 11 Cases, which may impact 

their business while in Chapter 11 and afterwards. The Debtors, with the assistance of their advisors, 

have considered these risks in formulating the Plan. 

1. The Debtors Will Be Subject to the Risks and Uncertainties Associated with 

the Chapter 11 Cases 

During the duration of the Chapter 11 Cases, the Debtors’ ability to operate, develop, and execute 

a business plan, and continue as a going concern, will be subject to the risks and uncertainties associated 

with bankruptcy. These risks include the following: (a) ability to develop, confirm, and consummate the 

Restructuring Transactions (including the corporate transactions necessary or desirable to implement the 

Plan); (b) ability to obtain Bankruptcy Court approval with respect to motions Filed in the Chapter 11 

Cases from time to time; (c) ability to maintain relationships with suppliers, service providers, customers, 

employees, and certain other third parties; (d) ability to maintain contracts that are critical to the Debtors’ 

operations and potential for a loss of, or a disruption in the materials or services received from suppliers, 

contractors or service providers with whom the Debtors have commercial relationships; (e) ability of third 

parties to seek and obtain Court approval to terminate contracts and other agreements with the Debtors; 

(f) ability of third parties to seek and obtain Court approval to terminate or shorten the exclusive period 

for the Debtors to propose and confirm a chapter 11 plan, to appoint a chapter 11 trustee, or to convert the 

Chapter 11 Cases to chapter 7 proceedings; and (g) the actions and decisions of the Debtors’ creditors and 

other third parties who have interests in the Chapter 11 Cases that may be inconsistent with the Debtors’ 

business plan. 

These risks and uncertainties could affect the Debtors’ business and operations in various ways. 

For example, negative events associated with the Chapter 11 Cases could adversely affect the Debtors’ 

relationships with suppliers, service providers, customers, employees, and other third parties, which in 

turn could adversely affect the Debtors’ operations and financial condition. Also, the Debtors will need 

the prior approval of the Bankruptcy Court for transactions outside the ordinary course of business, which 

may limit the Debtors’ ability to respond timely to certain events or take advantage of certain 

opportunities. Because of the risks and uncertainties associated with the Chapter 11 Cases, the Debtors 

cannot accurately predict or quantify the ultimate impact of events that occur during the Chapter 11 Cases 

that may be inconsistent with the Debtors’ business plan. 

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2. Operating in Bankruptcy for a Long Period of Time May Harm the 

Debtors’ Business 

A long period of operations under Bankruptcy Court protection could have a material adverse 

effect on the Debtors’ business, financial condition, results of operations, and liquidity. So long as the 

proceedings related to the Chapter 11 Cases continue, senior management will be required to spend a 

significant amount of time and effort dealing with the reorganization instead of focusing exclusively on 

business operations. A prolonged period of operating under Bankruptcy Court protection also may make 

it more difficult to retain management and other key personnel necessary to the success and growth of the 

Debtors’ business. In addition, the longer the proceedings related to the Chapter 11 Cases continue, the 

more likely it is that suppliers will lose confidence in the Debtors’ ability to reorganize their business 

successfully and will seek to limit their relationship with the Debtors. 

So long as the proceedings related to the Chapter 11 Cases continue, the Debtors will be required 

to incur substantial costs for professional fees and other expenses associated with the administration of 

the Chapter 11 Cases. Further, the Debtors may experience significant costs and delays due to litigation 

during the Chapter 11 Cases. The DIP Loan may not be sufficient to support day-to-day operations in the 

event of a prolonged restructuring process and the Debtors may be required to seek additional debtor in 

possession financing to fund operations. It is uncertain whether the Debtors will be unable to secure 

additional funding. If the Debtors are unable to obtain such financing on favorable terms or at all, 

chances of successfully reorganizing the Debtors’ business may be seriously jeopardized, the likelihood 

that the Debtors instead will be required to liquidate their assets may be enhanced, and, as a result, any 

claims and securities in the Debtors could become further devalued or become worthless. 

Further, the Debtors cannot predict the ultimate settlement terms for the liabilities that will be 

subject to a plan of reorganization. Even after a plan of reorganization is approved and implemented, the 

Reorganized Debtors’ operating results may be adversely affected by the possible reluctance of 

prospective lenders and other counterparties to do business with a company that recently emerged from 

bankruptcy protection. 

3. Financial Results May Be Volatile and May Not Reflect Historical Trends 

During the Chapter 11 Cases, the Debtors expect that their financial results will continue to be 

volatile as operation of their theaters will be subject to ongoing changes in government regulations, 

including stay at home orders. As a result, the Debtors’ historical financial performance likely will not be 

indicative of their financial performance after the Petition Date. As a result, the estimates are inherently 

imprecise evaluations of theater attendance and future net revenues. 

In addition, if the Debtors emerge from chapter 11, the amounts reported in subsequent 

consolidated financial statements may materially change relative to historical consolidated financial 

statements, including as a result of revisions to the Debtors’ operating plans pursuant to a plan of 

reorganization. The Debtors also may be required to adopt fresh start accounting, in which case their 

assets and liabilities will be recorded at fair value as of the fresh start reporting date, which may differ 

materially from the recorded values of assets and liabilities on the Debtors’ consolidated balance sheets. 

The Debtors’ financial results after the application of fresh start accounting also may be different from 

historical trends. 

4. The Debtors’ Operations May Be Restricted By the Availability of DIP 

Financing 

The Debtors’ principal sources of liquidity historically have been internally generated Cash flows 

from operations, borrowings under certain credit agreements, dispositions of non-strategic assets, and 

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intercompany loans. During the pendency of the Chapter 11 Cases, the Debtors’ liquidity depends mainly 

on Cash generated from operating activities and available funds under the DIP Loan. 

The Debtors’ future ability to operate their theaters is uncertain and will be affected by the levels 

of Cash flow from operations, development activities, and other events or circumstances beyond the 

Debtors’ control. If market or other economic conditions deteriorate, the Debtors’ ability to continue to 

operate may be impaired. Additionally, the pendency of the District Court Case—specifically the 

attachment by MN Theaters to debtor in possession loans or any other funds advanced by Grupo Cinemex 

to the Debtors in these bankruptcy cases—may affect the ability of the Debtors to obtain DIP Financing, 

and thus may restrict their operations. 

5. Uncertainty Concerning the Debtors’ Ability to Re-Open Their Theaters 

Profitably, Due to Stay at Home Orders and the Unavailability of New Films 

The Debtors’ post-confirmation operations are subject to uncertainty, due to various state issued 

stay at home orders and the potential unavailability of new films to show in their theaters. The stay at 

home orders may preclude the Debtors from operating their theaters at a capacity sufficient to generate 

profits, and the unavailability of new, first-run films may similarly impact attendance and revenues. 

C. Risks Related to Recoveries Provided Under the Plan 

Certain risks may affect the recoveries provided under the Plan. 

1. Timing and Amount of Distributions 

Various factors will impact the amount of recoveries that Holders of Allowed Claims receive, 

including, without limitation, the degree to which objections to Claims are successful. Further, due to the 

nature of litigation, it may take years to fully adjudicate, decide, or resolve objections to Claims. As a 

result, Holders of Allowed Claims may not receive final distributions in accordance to the Plan for a 

prolonged period of time following the Effective Date. 

2. The Debtors May Not Be Able to Achieve their Projected Financial Results 

The Debtors may not be able to achieve their projected financial results. The Financial 

Projections set forth in this Disclosure Statement represent the Debtors’ management team’s best estimate 

of the Debtors’ future financial performance, which is necessarily based on certain assumptions regarding 

the anticipated future performance of the Debtors’ operations, as well as the United States and world 

economies in general, and the industry segments in which the Debtors operate in particular. While the 

Debtors believe that the financial projections contained in this Disclosure Statement are reasonable, there 

can be no assurance that they will be realized. 

If the Debtors do not achieve their projected financial results, the value of the New Common 

Stock may be negatively affected. The Reorganized Debtors may lack sufficient liquidity to continue 

operating as planned after the Effective Date. Moreover, the financial condition and results of operations 

of the Reorganized Debtors from and after the Effective Date may not be comparable to the financial 

condition or results of operations reflected in the Debtors’ historical financial statements. 

3. Certain Tax Implications of the Plan 

Consummation of the Plan may result in significant tax implications for the Debtors and Holders 

of Claims. Holders of Allowed Claims should carefully review Article XII of this Disclosure Statement, 

entitled “CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE ,” 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 67 of 92
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which begins on page [[53]], to determine how the tax implications of the Plan and the Chapter 11 Cases 

may adversely affect the Reorganized Debtors and Holders of Claims. 

4. The Reorganized Debtors May Not Be Able to Operate Profitably 

The Reorganized Debtors’ ability operate profitably and generate sufficient cash flow to sustain 

their business remain subject to prevailing economic, industry, and competitive conditions and to certain 

financial, business, legislative, regulatory, and other factors beyond the Reorganized Debtors’ control. 

The Reorganized Debtors may be unable to maintain a level of cash flow from operating activities 

sufficient to permit the Reorganized Debtors to pay the TLCF Note after emergence. 

5. The Reorganized Debtors May Be Adversely Affected by Potential 

Litigation, Including Litigation Arising Out of the Chapter 11 Cases or by 

the Resolution of Pending Litigation Unrelated to the Chapter 11 

Proceedings 

The Reorganized Debtors may become parties to litigation or litigation in which the Debtors are 

already a party may not be resolved in the Reorganized Debtors’ favor. In general, litigation can be 

expensive and time consuming to bring or defend against. Such litigation could result in settlements or 

damages that could significantly affect the Reorganized Debtors’ financial results. It is also possible that 

certain parties will commence litigation with respect to the treatment of their Claims under the Plan. It is 

not possible to predict the potential litigation that the Reorganized Debtors may become party to, nor the 

final resolution of any litigation. The impact of any such litigation on the Reorganized Debtors’ business 

and financial stability, however, could be material. 

6. Certain Claims May Not Be Discharged and Could Have a Material Adverse 

Effect on the Reorganized Debtors’ Financial Condition and Results of 

Operations 

The Bankruptcy Code provides that the confirmation of a plan of reorganization discharges a 

debtor from substantially all debts arising prior to confirmation. With few exceptions, all Claims that 

arise prior to the Debtors’ Filing of their Petitions or before confirmation of the Plan (a) would be subject 

to compromise and/or treatment under the Plan and/or (b) would be discharged in accordance with the 

terms of the Plan. However, the Debtors may assume certain prepetition agreements that include certain 

indemnification obligations. As such, the Reorganized Debtors may retain liabilities under such 

agreements that may be material. Further, any Claims not ultimately discharged through the Plan could 

be asserted against the Reorganized Debtors and may have an adverse effect on the Reorganized Debtors’ 

financial condition and results of operations on a post-reorganization basis. 

IX. SOLICITATION AND VOTING PROCEDURES 

This Disclosure Statement, which is accompanied by a Ballot or Ballots to be used for voting on 

the Plan, is being distributed to the Holders of Claims in those Classes that are entitled to vote to accept or 

reject the Plan. The procedures and instructions for voting and related deadlines are set forth in the 

exhibits annexed to the Disclosure Statement Order, which is attached hereto as Exhibit C.

The Disclosure Statement Order is incorporated herein by reference and should be read in 

conjunction with this Disclosure Statement and in formulating a decision to vote to accept or reject the 

Plan. 

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THE DISCUSSION OF THE SOLICITATION AND VOTING PROCESS SET FORTH IN THIS 

DISCLOSURE STATEMENT IS ONLY A SUMMARY. PLEASE REFER TO THE DISCLOSURE 

STATEMENT ORDER ATTACHED HERETO FOR A MORE COMPREHENSIVE DESCRIPTION 

OF THE SOLICITATION AND VOTING PROCESS. 

A. Holders of Claims Entitled to Vote on the Plan 

Under the provisions of the Bankruptcy Code, not all Holders of Claims against a debtor are 

entitled to vote on a chapter 11 plan. The table in Article IV.C of this Disclosure Statement, entitled “ 

Am I entitled to vote on the Plan?,” which begins on page 5, provides a summary of the status 

and voting rights of each Class (and, therefore, of each Holder within such Class absent an objection to 

the Holder’s Claim) under the Plan. 

As shown in the table, the Debtors are soliciting votes to accept or reject the Plan only from 

Holders of Claims in Classes 3, 4, and 5 (collectively, the “Voting Classes”). The Holders of Claims in 

the Voting Classes are Impaired under the Plan and may, in certain circumstances, receive a distribution 

under the Plan. Accordingly, Holders of Claims in the Voting Classes have the right to vote to accept or 

reject the Plan. 

The Debtors are not soliciting votes from Holders of Claims and Interests in Classes 1, 2, 6, 7, 

and 8. Additionally, the Disclosure Statement Order provides that certain Holders of Claims in the 

Voting Classes, such as those Holders whose Claims have been disallowed, are not entitled to vote to 

accept or reject the Plan.

B. Voting Record Date 

The Voting Record Date is [●]. The Voting Record Date is the date on which it will be 

determined which Holders of Claims in the Voting Classes are entitled to vote to accept or reject the Plan 

and whether Claims have been properly assigned or transferred under Bankruptcy Rule 3001(e) such that 

an assignee or transferee, as applicable, can vote to accept or reject the Plan as the Holder of a Claim.

C. Voting on the Plan 

The Voting Deadline is [●], at 4:00 p.m. (prevailing Eastern Time). In order to be counted as 

votes to accept or reject the Plan, ballots must be returned as directed and received by the Voting 

Deadline. 

D. Ballots Not Counted 

No Ballot will be counted toward Confirmation if, among other things: (1) it is illegible or 

contains insufficient information to permit the identification of the Holder of the Claim; (2) it was 

transmitted by facsimile, email, or other electronic means other than as specifically set forth in the ballots; 

(3) it was cast by an Entity that is not entitled to vote on the Plan; (4) it was cast for a Claim listed in the 

Debtors’ Schedules as contingent, unliquidated, or disputed for which the applicable Claims Bar Date has 

passed and no Proof of Claim was timely Filed; (5) it was cast for a Claim that is subject to an objection 

pending as of the Voting Record Date (unless temporarily allowed in accordance with the Disclosure 

Statement Order); (6) it was sent to the Debtors, the Debtors’ agents/representatives (other than the Notice 

and Claims Agent), an administrative agent, an indenture trustee, or the Debtors’ financial or legal 

advisors instead of the Notice and Balloting Agent; (7) it is unsigned; or (8) it is not clearly marked to 

either accept or reject the Plan or it is marked both to accept and reject the Plan. Please refer to the 

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Disclosure Statement Order (and attachments) for additional requirements with respect to voting 

to accept or reject the Plan. 

IF YOU HAVE ANY QUESTIONS ABOUT THE SOLICITATION OR VOTING PROCESS, 

PLEASE EMAIL OMNI SOLUTIONS (CinemexInquiries@OmniAgnt.com) AND REFERENCE 

“CINEMEX” IN THE SUBJECT LINE OR CALL THE PHONE NUMBER LISTED ON YOUR 

BALLOT (866-771-0562). 

ANY BALLOT RECEIVED AFTER THE VOTING DEADLINE OR OTHERWISE 

NOT IN COMPLIANCE WITH THE DISCLOSURE STATEMENT ORDER 

WILL NOT BE COUNTED.

X. CONFIRMATION OF THE PLAN 

A. Requirements for Confirmation of the Plan 

Among the requirements for Confirmation of the Plan pursuant to section 1129 of the Bankruptcy 

Code are: (1) the Plan is accepted by all Impaired Classes of Claims or Interests, or if rejected by an 

Impaired Class, the Plan “does not discriminate unfairly” and is “fair and equitable” as to the rejecting 

Impaired Class; (2) the Plan is feasible; and (3) the Plan is in the “best interests” of Holders of Claims and 

Interests. 

At the Confirmation Hearing, the Bankruptcy Court will determine whether the Plan satisfies all 

of the requirements of section 1129 of the Bankruptcy Code. The Debtors believe that: (1) the Plan 

satisfies, or will satisfy, all of the necessary statutory requirements of chapter 11; (2) the Debtors have 

complied, or will have complied, with all of the necessary requirements of chapter 11; and (3) the Plan 

has been proposed in good faith. 

If any Parties intend to seek discovery in connection with Confirmation of the Plan, such Parties 

are encouraged to seek such discovery as soon as possible, because there is no guarantee that there will be 

sufficient funds to finance the Chapter 11 Cases if the Confirmation Hearing is delayed due to protracted 

Plan discovery. 

B. Best Interests of Creditors/Liquidation Analysis 

Often called the “best interests” test, section 1129(a)(7) of the Bankruptcy Code requires that a 

bankruptcy court find, as a condition to confirmation, that a chapter 11 plan provides, with respect to each 

impaired class, that each Holder of a claim or an equity interest in such impaired class either (1) has 

accepted the plan or (2) will receive or retain under the plan property of a value that is not less than the 

amount that the non-accepting Holder would receive or retain if the Debtors liquidated under chapter 7. 

Attached hereto as Exhibit D and incorporated herein by reference is a liquidation analysis 

(the “Liquidation Analysis”) prepared by the Debtors with the assistance of Province, Inc., the Debtors’ 

restructuring advisor. As reflected in the Liquidation Analysis, the Debtors believe that liquidation of the 

Debtors’ business under chapter 7 of the Bankruptcy Code would result in substantial diminution in the 

value to be realized by Holders of Claims as compared to distributions contemplated under the Plan. 

Consequently, the Debtors and their management believe that Confirmation of the Plan will provide a 

substantially greater return to Holders of Claims than would a liquidation under chapter 7 of the 

Bankruptcy Code. 

If the Plan is not confirmed, and the Debtors fail to propose and confirm an alternative plan of 

reorganization, the Debtors’ business may be liquidated pursuant to the provisions of a chapter 11 

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liquidating plan. In liquidations under chapter 11, the Debtors’ assets could be sold in an orderly fashion 

over a more extended period of time than in a liquidation under chapter 7. Thus, a chapter 11 liquidation 

may result in larger recoveries than a chapter 7 liquidation, but the delay in distributions could result in 

lower present values received and higher administrative costs. Any distribution to Holders of Claims 

under a chapter 11 liquidation plan would most likely be substantially delayed. Most importantly, the 

Debtors believe that any distributions to creditors in a chapter 11 liquidation scenario would fail to 

capture the significant going concern value of their business, which is reflected in the New Common 

Stock to be distributed under the Plan. Accordingly, the Debtors believe that a chapter 11 liquidation 

would not result in distributions as favorable as those under the Plan. 

C. Feasibility 

Section 1129(a)(11) of the Bankruptcy Code requires that confirmation of a plan of 

reorganization is not likely to be followed by the liquidation, or the need for further financial 

reorganization of the debtor, or any successor to the debtor (unless such liquidation or reorganization is 

proposed in such plan of reorganization). 

To determine whether the Plan meets this feasibility requirement, the Debtors, with the assistance 

of Province, Inc., the Debtors’ financial advisor, have analyzed their ability to meet their respective 

obligations under the Plan. As part of this analysis, the Debtors prepared forecasted, post reorganized 

financial projections (the “Financial Projections”) for the annual periods ending December 31, 2021 

(fiscal year 2021) through December 31, 2023 (fiscal year 2023) (the “Projection Period”). The 

Financial Projections were prepared based on a number of assumptions made by the Debtors’ 

management team as to the future performance of the Reorganized Debtors, and reflect management’s 

judgement and expectations regarding its future operations and financial position. The Financial 

Projections are based on an assumption that the Plan is consummated on or around November 25, 2020; 

to the extent that the Effective Date occurs before or after such date, recoveries on account of Allowed 

Claims could be impacted. Creditors and other interested parties should review Article VIII of this 

Disclosure Statement, entitled “RISK FACTORS,” which begins on page 36, for a discussion of certain 

factors that may affect the future financial performance of the Reorganized Debtors. 

The Financial Projections are attached hereto as Exhibit E and incorporated herein by reference. 

Based upon the Financial Projections, the Debtors believe that they will be a viable operation following 

the Chapter 11 Cases and that the Plan will meet the feasibility requirements of the Bankruptcy Code. 

D. Acceptance by Impaired Classes 

The Bankruptcy Code requires, as a condition to confirmation, except as described in the 

following section, that each class of claims or equity interests impaired under a plan, accepts the plan. A 

class that is not “impaired” under a plan is deemed to have accepted the plan and, therefore, solicitation of 

votes with respect to such a class is not required.6

Section 1126(c) of the Bankruptcy Code defines acceptance of a plan by a class of impaired 

claims as acceptance by Holders of at least two-thirds in a dollar amount and more than one-half in a 

 

6

 A class of claims is “impaired” within the meaning of section 1124 of the Bankruptcy Code unless the plan 

(a) leaves unaltered the legal, equitable and contractual rights to which the claim or equity interest entitles the 

holder of such claim or equity interest or (b) cures any default, reinstates the original terms of such obligation, 

compensates the holder for certain damages or losses, as applicable, and does not otherwise alter the legal, 

equitable, or contractual rights to which such claim or equity interest entitles the holder of such claim or equity 

interest. 

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number of allowed claims in that class, counting only those claims that have actually voted to accept or to 

reject the plan. Thus, a class of claims will have voted to accept the plan only if two-thirds in amount and 

a majority in number actually cast their ballots in favor of acceptance. 

E. Confirmation without Acceptance by All Impaired Classes 

Section 1129(b) of the Bankruptcy Code allows a bankruptcy court to confirm a plan even if all 

impaired classes have not accepted it; provided that the plan has been accepted by at least one impaired 

class. Pursuant to section 1129(b) of the Bankruptcy Code, notwithstanding an impaired class’s rejection 

or deemed rejection of the plan, the plan will be confirmed, at the plan proponent’s request, in a 

procedure commonly known as a “cramdown” so long as the plan does not “discriminate unfairly” and is 

“fair and equitable” with respect to each class of claims or equity interests that is impaired under, and has 

not accepted, the plan. 

If any Impaired Class rejects the Plan, the Debtors reserve the right to seek to confirm the Plan 

utilizing the “cramdown” provision of section 1129(b) of the Bankruptcy Code. To the extent that any 

Impaired Class rejects the Plan or is deemed to have rejected the Plan, the Debtors will request 

Confirmation of the Plan, as it may be modified from time to time, under section 1129(b) of the 

Bankruptcy Code. The Debtors reserve the right, in consultation with the Committee, to alter, amend, 

modify, revoke, or withdraw the Plan or any Plan Supplement document, including the right to amend or 

modify the Plan or any Plan Supplement document to satisfy the requirements of section 1129(b) of the 

Bankruptcy Code. 

1. No Unfair Discrimination 

The “unfair discrimination” test applies to classes of claims or interests that are of equal priority 

and are receiving different treatment under a plan. The test does not require that the treatment be the 

same or equivalent, but that treatment be “fair.” In general, bankruptcy courts consider whether a plan 

discriminates unfairly in its treatment of classes of claims of equal rank (e.g., classes of the same legal 

character). Bankruptcy courts will take into account a number of factors in determining whether a plan 

discriminates unfairly. A plan could treat two classes of unsecured creditors differently without unfairly 

discriminating against either class. 

2. Fair and Equitable Test 

The “fair and equitable” test applies to classes of different priority and status (e.g., secured versus 

unsecured) and includes the general requirement that no class of claims receive more than 100 percent of 

the amount of the allowed claims in the class. As to the dissenting class, the test sets different standards 

depending upon the type of claims or equity interests in the class. 

The Debtors submit that if the Debtors “cramdown” the Plan pursuant to section 1129(b) of the 

Bankruptcy Code, the Plan is structured so that it does not “discriminate unfairly” and satisfies the “fair 

and equitable” requirement. With respect to the unfair discrimination requirement, all Classes under the 

Plan are provided treatment that is substantially equivalent to the treatment that is provided to other 

Classes that have equal rank. With respect to the fair and equitable requirement, no Class under the Plan 

will receive more than 100 percent of the amount of Allowed Claims in that Class. The Debtors believe 

that the Plan and the treatment of all Classes of Claims and Interests under the Plan satisfy the foregoing 

requirements for nonconsensual Confirmation of the Plan. 

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F. Valuation of the Debtors 

In conjunction with formulating the Plan and satisfying its obligations under section 1129 of the 

Bankruptcy Code, the Debtors determined that it was necessary to estimate the post‐Confirmation going 

concern value of the Debtors. The Debtors concluded that the best method for determining such value 

was through a market test via the Auction process. Accordingly, the Debtors have undertaken a 

conducted a robust marketing process for the sale of some or all of their assets, including seeking 

proposals for the acquisition of the New Common Stock under a chapter 11 plan. The Debtors believe the 

Auction process will provide a good indication of the true value of the Debtors. 

To complement the Auction process, the Debtors’ financial advisors are preparing a separate 

Valuation Analysis, which, if necessary, the Debtors will include in the Plan Supplement. The Debtors 

anticipate that the enterprise valuation, as set forth in the Valuation Analysis, may be substantially less 

than the value ascribed to the Debtors’ assets in their Petitions and subsequently Filed Schedules. The 

value of the Debtors’ assets as listed on the Debtors’ Schedules was based on net book values as of April 

25, 2020, and as set forth in the Schedules (as amended), such values were not calculated in accordance 

with Generally Accepted Accounting Principles (“GAAP”). Book values of assets prepared in 

accordance with GAAP generally do not reflect the current performance of the assets or the impact of 

COVID-19 and the stay at home orders that have impacted the Debtors’ operations, and may differ 

materially from the actual value and/or performance of the underlying assets. Given the dramatic impact 

of COVID-19 on the Debtors’ operations over the past six months, and the continued impact going 

forward, this difference is material. As such, the value listed in the Petitions and the subsequently Filed 

Schedules cannot be, and was not, used to determine the Debtors’ enterprise valuation. 

G. The Plan Supplement 

The Debtors will File certain documents that provide additional details regarding implementation 

of the Plan in the Plan Supplement, which will be Filed with the Bankruptcy Court in accordance with the 

Disclosure Statement Order (or such later date as may be approved by the Bankruptcy Court). The Plan 

Supplement will include documents in accordance with the Disclosure Statement Order. The Debtors 

may amend the documents contained in, and exhibits to, the Plan Supplement through the Effective Date. 

Copies of the Plan Supplement documents will be available on the website of the Debtors’ Notice 

and Claims Agent at https://cases.omniagentsolutions.com/Cinemex or the Bankruptcy Court’s website at 

https://ecf.flsb.uscourts.gov (for a fee). 

XI. CERTAIN SECURITIES LAW MATTERS 

A. New Common Stock 

As discussed herein, the Plan provides for the reorganized Debtors to distribute the New 

Common Stock to the Purchaser. The New Common Stock may be “securities,” as defined in Section 

2(a)(1) of the Securities Act, section 101 of the Bankruptcy Code, and applicable state securities laws. 

B. Issuance and Resale of New Common Stock under the Plan 

1. Private Placement Exemptions 

The offering, issuance, and distribution of the New Common Stock pursuant to the Plan will be 

exempt from the registration requirements of section 5 of the Securities Act pursuant to section 4(a)(2) of 

the Securities Act, or any other available exemption from registration under the Securities Act, as 

applicable. Section 4(a)(2) of the Securities Act exempts transactions not involving a public offering, and 

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section 506 of Regulation D of the Securities Act provides a safe harbor under section 4(a)(2) for 

transactions that meet certain requirements. In reliance upon these exemptions, the offer, issuance, and 

distribution of New Common Stock pursuant to the Plan will not be registered under the Securities Act or 

any applicable state “Blue Sky” laws, and the New Common Stock issued pursuant to the Plan will be 

considered “restricted securities” and may not be transferred, encumbered, or otherwise disposed of in the 

absence of such registration or an exemption therefrom under the Securities Act or under such laws and 

regulations thereunder. The New Common Stock issued under the Plan will bear a legend relating to the 

transfer restrictions applicable thereto. The new equity underlying the Management Incentive Plan, if 

applicable, will be issued pursuant to a registration statement or another available exemption from 

registration under the Securities Act and other applicable law. 

RECIPIENTS OF NEW COMMON STOCK ARE ADVISED TO CONSULT WITH 

THEIR OWN LEGAL ADVISORS AS TO THE AVAILABILITY OF ANY EXEMPTION FROM 

REGISTRATION UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE BLUE 

SKY LAW. 

2. Resale of New Common Stock; Definition of Underwriter 

Section 1145(b)(1) of the Bankruptcy Code defines an “underwriter” as one who, except with 

respect to “ordinary trading transactions” of an Entity that is not an “issuer”: (a) purchases a claim 

against, interest in, or claim for an administrative expense in the case concerning, the debtor, if such 

purchase is with a view to distribution of any security received or to be received in exchange for such 

claim or interest; (b) offers to sell securities offered or sold under a plan for the Holders of such 

securities; (c) offers to buy securities offered or sold under a plan from the Holders of such securities, if 

such offer to buy is (i) with a view to distribution of such securities and (ii) under an agreement made in 

connection with the plan, with the consummation of the plan, or with the offer or sale of securities under 

the plan; or (d) is an issuer of the securities within the meaning of section 2(a)(11) of the Securities Act. 

In addition, a Person who receives a fee in exchange for purchasing an issuer’s securities could also be 

considered an underwriter within the meaning of section 2(a)(11) of the Securities Act. 

The definition of an “issuer” for purposes of whether a Person is an underwriter under 

section 1145(b)(1)(D) of the Bankruptcy Code, by reference to section 2(a)(11) of the Securities Act, 

includes as “statutory underwriters” all persons who, directly or indirectly, through one or more 

intermediaries, control, are controlled by, or are under common control with, an issuer of securities. The 

reference to “issuer,” as used in the definition of “underwriter” contained in section 2(a)(11) of the 

Securities Act, is intended to cover “Controlling Persons” of the issuer of the securities. “Control,” as 

defined in Rule 405 of the Securities Act, means the possession, directly or indirectly, of the power to 

direct or cause the direction of the management and policies of a Person, whether through the ownership 

of voting securities, by contract, or otherwise. Accordingly, an officer or director of a reorganized debtor 

or its successor under a plan of reorganization may be deemed to be a “Controlling Person” of the debtor 

or successor, particularly if the management position or directorship is coupled with ownership of a 

significant percentage of the reorganized debtor’s or its successor’s voting securities. While there is no 

precise definition of a “controlling” stockholder, the legislative history of section 1145 of the Bankruptcy 

Code suggests that a creditor who owns ten percent or more of a class of securities of a reorganized 

debtor may be presumed to be a “Controlling Person” and, therefore, an underwriter. 

Resales of New Common Stock by Entities deemed to be “underwriters” (which definition 

includes “Controlling Persons”) are not exempted by section 1145 of the Bankruptcy Code from 

registration under the Securities Act or other applicable law. Under certain circumstances, Holders of 

New Common Stock who are deemed to be “underwriters” may be entitled to resell their New Common 

Stock pursuant to the limited safe harbor resale provisions of Rule 144 of the Securities Act. Generally, 

Rule 144 of the Securities Act would permit the public sale of securities received by such Person if the 

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required holding period has been met and, under certain circumstances, current information regarding the 

issuer is publicly available and volume limitations, manner of sale requirements and certain other 

conditions are met. Whether any particular Person would be deemed to be an “underwriter” (including 

whether the Person is a “Controlling Person”) with respect to the New Common Stock would depend 

upon various facts and circumstances applicable to that Person. Given the complex nature of the question 

of whether a particular person may be an underwriter and other issues arising under applicable securities 

laws, accordingly, the Debtors express no view as to whether any Person would be deemed an 

“underwriter” with respect to the New Common Stock and, in turn, whether any Person may freely resell 

New Common Stock. The Debtors recommend that potential recipients of New Common Stock

consult their own counsel concerning their ability to freely trade such securities without compliance 

with the federal law and any applicable state Blue Sky Law.

3. New Common Stock / Management Incentive Plan 

The participants in the Management Incentive Plan, the timing and allocations of the awards to 

participants, and the other terms and conditions of such awards (including, but not limited to, vesting, 

exercise prices, base values, hurdles, forfeiture, repurchase rights, and transferability) shall be determined 

by the Reorganized Cinemex Holdings Board. The Management Incentive Plan shall dilute all of the 

New Common Stock (if applicable). 

XII. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE 

PLAN 

A. Introduction 

The following discussion summarizes certain United States (“U.S.”) federal income tax 

consequences of the implementation of the Plan to the Debtors, the Reorganized Debtors, and certain 

Holders of Claims. This summary is based on the Internal Revenue Code of 1986, as amended (the 

“Tax Code”), the U.S. Treasury Regulations promulgated thereunder (the “Treasury Regulations”), 

judicial decisions and published administrative rules, and pronouncements of the Internal Revenue 

Service (the “IRS”), all as in effect on the date hereof (collectively, “Applicable Tax Law”). Changes in 

the rules or new interpretations of the rules may have retroactive effect and could significantly affect the 

U.S. federal income tax consequences described below. The Debtors have not requested, and will not 

request, any ruling or determination from the IRS or any other taxing authority with respect to the tax 

consequences discussed herein, and the discussion below is not binding upon the IRS or the courts. No 

assurance can be given that the IRS would not assert, or that a court would not sustain, a different position 

than any position discussed herein. 

This summary does not address foreign, state, or local tax consequences of the Plan, nor does it 

purport to address all aspects of U.S. federal income taxation that may be relevant to a Holder in light of 

its individual circumstances or to a Holder that may be subject to special tax rules (such as Persons who 

are related to the Debtors within the meaning of the Tax Code, persons liable for alternative minimum 

tax, foreign taxpayers, broker-dealers, banks, mutual funds, insurance companies, financial institutions, 

small business investment companies, regulated investment companies, tax exempt organizations, passthrough entities, beneficial owners of pass-through entities, subchapter S corporations, persons who hold 

Claims or who will hold the New Common Stock as part of a straddle, hedge, conversion transaction, or 

other integrated investment, persons using a mark-to-market method of accounting, and Holders of 

Claims who are themselves in bankruptcy). Further, this summary assumes that a Holder of a Claim 

holds only Claims in a single Class and holds a Claim only as a “capital asset” (within the meaning of 

section 1221 of the Tax Code). This summary also assumes that the various debt and other arrangements 

to which any of the Debtors are a party will be respected for U.S. federal income tax purposes in 

accordance with their form, and that the Claims constitute interests in the Debtors “solely as a creditor” 

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for purposes of section 897 of the Tax Code. This summary does not discuss differences in tax 

consequences to Holders of Claims that act or receive consideration in a capacity other than any other 

Holder of a Claim of the same Class or Classes, and the tax consequences for such Holders may differ 

materially from that described below. 

For purposes of this discussion, a “U.S. Holder” is a Holder of a Claim that is: (1) an individual 

citizen or resident of the United States for U.S. federal income tax purposes; (2) a corporation (or other 

Entity treated as a corporation for U.S. federal income tax purposes) created or organized under the laws 

of the United States, any state thereof or the District of Columbia; (3) an estate the income of which is 

subject to U.S. federal income taxation regardless of the source of such income; or (4) a trust (A) if a 

court within the United States is able to exercise primary jurisdiction over the trust’s administration and 

one or more United States persons have authority to control all substantial decisions of the trust or 

(B) that has a valid election in effect under applicable Treasury Regulations to be treated as a United 

States person. For purposes of this discussion, a “non-U.S. Holder” is any Holder of a Claim that is not a 

U.S. Holder other than any partnership (or other Entity treated as a partnership or other pass-through 

Entity for U.S. federal income tax purposes). 

If a partnership (or other Entity treated as a partnership or other pass-through Entity for U.S. 

federal income tax purposes) is a Holder of a Claim, the tax treatment of a partner (or other beneficial 

owner) generally will depend upon the status of the partner (or other beneficial owner) and the activities 

of the Entity. Partners (or other beneficial owners) of partnerships (or other pass-through entities) that are 

Holders of Claims should consult their respective tax advisors regarding the U.S. federal income tax 

consequences of the Plan. 

ACCORDINGLY, THE FOLLOWING SUMMARY OF CERTAIN U.S. FEDERAL 

INCOME TAX CONSEQUENCES IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT 

A SUBSTITUTE FOR CAREFUL TAX PLANNING AND ADVICE BASED UPON THE 

INDIVIDUAL CIRCUMSTANCES PERTAINING TO A HOLDER OF A CLAIM OR 

INTEREST. ALL HOLDERS OF CLAIMS OR INTERESTS ARE URGED TO CONSULT 

THEIR OWN TAX ADVISORS AS TO THE FEDERAL, STATE, LOCAL, AND NON-U.S. 

INCOME, ESTATE, AND OTHER TAX CONSEQUENCES OF THE PLAN. 

B. Certain U.S. Federal Income Tax Consequences to the Debtors and the Reorganized 

Debtors

The Debtors intend to structure the Restructuring Transactions as a reorganization of the Debtors 

as a going concern without any taxable sales of any assets pursuant to the Plan (such a structure, an 

“Equity Transaction”). If the Debtors structure the Restructuring Transactions as an Equity Transaction, 

the transaction would not give rise to any gain or loss, but will give rise to CODI, as described below. In 

an Equity Transaction, the Debtors’ tax attributes will, subject to the rules discussed below regarding 

CODI and Section 382 of the Tax Code, survive the restructuring process and potentially be usable by the 

Reorganized Debtors going forward. 

1. Cancellation of Debt and Reduction of Tax Attributes 

In general, absent an exception, a debtor will realize and recognize CODI, for U.S. federal 

income tax purposes, upon satisfaction of its outstanding indebtedness for total consideration less than the 

amount of such indebtedness. The amount of CODI, in general, is the excess of (a) the adjusted issue 

price of the indebtedness satisfied, over (b) the sum of (i) the amount of Cash paid, (ii) the issue price of 

any new indebtedness of the taxpayer issued, and (iii) the fair market value of any other new 

consideration (including stock of the debtor) given in satisfaction of such indebtedness at the time of the 

exchange. 

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Under section 108 of the Tax Code, a debtor is not required to include CODI in gross income if 

the debtor is under the jurisdiction of a court in a case under chapter 11 of the Bankruptcy Code and the 

discharge of debt occurs pursuant to that proceeding. Instead, as a consequence of such exclusion, a 

debtor must reduce its tax attributes by the amount of CODI that it excluded from gross income pursuant 

to the rule discussed in the preceding sentence. In general, tax attributes will be reduced in the following 

order: (a) NOLs; (b) most tax credits; (c) capital loss carryovers; (d) tax basis in assets (but not below the 

amount of liabilities to which the debtor remains subject); (e) passive activity loss and credit carryovers; 

and (f) foreign tax credits.7

 Alternatively, a debtor with CODI may elect first to reduce the basis of its 

depreciable assets pursuant to section 108(b)(5) of the Tax Code.8

 The reduction in tax attributes occurs 

only after the tax for the year of the debt discharge has been determined. Any excess CODI over the 

amount of available tax attributes is not subject to U.S. federal income tax and has no other U.S. federal 

income tax impact. 

The Treasury Regulations address the method and order for applying tax attribute reduction to an 

affiliated group of corporations. Under these Treasury Regulations, the tax attributes of each member of 

an affiliated group of corporations that is excluding CODI is first subject to reduction. To the extent the 

debtor member’s tax basis in stock of a lower-tier member of the affiliated group is reduced, a “look 

through rule” requires that a corresponding reduction be made to the tax attributes of the lower-tier 

member. If a debtor member’s excluded CODI exceeds its tax attributes, the excess CODI is applied to 

reduce certain remaining consolidated tax attributes of the affiliated group. 

As a result of the Restructuring Transactions, the Debtors expect to realize CODI. The exact 

amount of any CODI that will be realized by the Debtors will not be determinable until, at the earliest, the 

consummation of the Plan. Because the Plan provides that certain Claim Holders will receive non-Cash 

consideration, the amount of CODI, and accordingly the amount of tax attributes required to be reduced, 

will depend, in part, on the fair market value of the non-Cash consideration received, which cannot be 

known with certainty at this time. 

2. Limitation of NOL Carryforwards and Other Tax Attributes 

As of December 31, 2019, the Debtors had approximately $170 million of NOLs. Additional 

losses may be generated in 2020. Following the Effective Date, the Debtors anticipate that any NOL 

carryovers, capital loss carryovers, tax credit carryovers, and certain other tax attributes (such as losses 

and deductions that have accrued economically but are unrecognized as of the date of the ownership 

change) of the Reorganized Debtors that are not reduced according to the CODI rules described above 

and that are allocable to periods before the Effective Date (collectively, the “Pre-Change Losses”) may be 

subject to limitation under sections 382 and 383 of the Tax Code as a result of an “ownership change” of 

the Reorganized Debtors by reason of the transactions consummated pursuant to the Plan. 

Under sections 382 and 383 of the Tax Code, if a corporation undergoes an “ownership change,” 

the amount of its Pre-Change Losses that may be utilized to offset future taxable income generally is 

subject to an annual limitation. The rules of section 382 of the Tax Code are complicated, but as a 

general matter, the Debtors anticipate that the distribution of the New Common Stock pursuant to the Plan 

 

7

 Under the 2017 tax reform legislation commonly referred to as the tax cuts and jobs act (the “Tax Cut and Jobs 

Act”), interest deductions in excess of statutorily-defined limits are deferred under section 163(j) of the Tax 

Code unless and until a debt issuer has sufficient adjusted taxable income to be entitled to claim such 

deductions. It is unclear whether interest deductions that are deferred under section 163(j) are subject to 

reduction under section 108. 

8

 This extent to which this election can apply to the Debtors’ assets that are subject to depletion, as opposed to 

depreciation, is subject to uncertainty. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 77 of 92
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will result in an “ownership change” of the Reorganized Debtors for these purposes, and that the 

Reorganized Debtors’ use of their Pre-Change Losses will be subject to limitation unless an exception to 

the general rules of section 382 of the Tax Code applies. 

For this purpose, if a corporation (or consolidated group) has a net unrealized built-in loss at the 

time of an ownership change (taking into account most assets and items of “built-in” income and 

deductions), then generally built-in losses (including amortization or depreciation deductions attributable 

to such built-in losses) recognized during the following five years (up to the amount of the original net 

unrealized built-in loss) will be treated as Pre-Change Losses and similarly will be subject to the annual 

limitation. Although not free from doubt, the Debtors currently believe that they may have a net 

unrealized built-in loss. In general, a corporation’s (or consolidated group’s) net unrealized built-in loss 

will be deemed to be zero unless it is greater than the lesser of (a) $10,000,000 or (b) 15 percent of the 

fair market value of its assets (with certain adjustments) before the ownership change. 

(a) General Section 382 Annual Limitation 

In general, the amount of the annual limitation to which a corporation that undergoes an 

“ownership change” would be subject is equal to the product of (a) the fair market value of the stock of 

the corporation immediately before the “ownership change” (with certain adjustments) multiplied by 

(b) the “long-term tax-exempt rate” (which is the highest of the adjusted federal long-term rates in effect 

for any month in the 3-calendar-month period ending with the calendar month in which the “ownership 

change” occurs, currently 0.89% for September 2020). The section 382 Limitation may be increased to 

the extent that the Debtors recognize certain built-in gains in their assets during the five-year period 

following the ownership change, or are treated as recognizing built-in gains pursuant to the safe harbors 

provided in IRS Notice 2003-65, but only to the extent the Debtors have a net unrealized built-in gain at 

the time of the ownership change. Although not free from doubt, the Debtors do not currently believe that 

they have a net unrealized built-in gain. Section 383 of the Tax Code applies a similar limitation to 

capital loss carryforwards and tax credits. Any unused limitation may be carried forward, thereby 

increasing the annual limitation in the subsequent taxable year. As discussed below, however, special 

rules may apply in the case of a corporation that experiences an ownership change as the result of a 

bankruptcy proceeding. 

Notwithstanding the rules described above, if post-ownership change, a debtor corporation and its 

subsidiaries do not continue the debtor corporation’s historic business or use a significant portion of its 

historic business assets in a new business for two years after the ownership change, the annual limitation 

resulting from the ownership change is zero. 

(b) Special Bankruptcy Exceptions 

An exception to the foregoing annual limitation rules generally applies when so-called “qualified 

creditors” of a debtor corporation in chapter 11 receive, in respect of their Claims, at least 50 percent of 

the vote and value of the stock of the reorganized debtor (or a controlling corporation if also in 

chapter 11) pursuant to a confirmed chapter 11 plan (the “382(l)(5) Exception”). Under the 

382(l)(5) Exception, a debtor’s Pre-Change Losses are not limited on an annual basis, but, instead, NOL 

carryforwards will be reduced by the amount of any interest deductions claimed during the three taxable 

years preceding the effective date of the plan of reorganization, and during the part of the taxable year 

prior to and including the effective date of the plan of reorganization, in respect of all debt converted into 

stock in the reorganization. If the 382(l)(5) Exception applies and the Reorganized Debtors undergo 

another “ownership change” within two years after the Effective Date, then the Reorganized Debtors’ 

Pre-Change Losses effectively would be eliminated in their entirety. 

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Where the 382(l)(5) Exception is not applicable to a corporation in bankruptcy (either because the 

debtor does not qualify for it or the debtor otherwise elects not to utilize the 382(l)(5) Exception), a 

second special rule will generally apply (the “382(l)(6) Exception”). Under the 382(l)(6) Exception, the 

annual limitation will be calculated by reference to the lesser of the value of the debtor corporation’s new 

stock (with certain adjustments) immediately after the ownership change or the value of such debtor 

corporation’s assets (determined without regard to liabilities) immediately before the ownership change. 

This differs from the ordinary rule that requires the fair market value of a debtor corporation that 

undergoes an “ownership change” to be determined before the events giving rise to the change. The 

382(l)(6) Exception also differs from the 382(l)(5) Exception in that under it the debtor corporation is not 

required to reduce its NOL carryforwards by the amount of interest deductions claimed within the prior 

three-year period, and the debtor may undergo an ownership change within two years without triggering 

the elimination of its Pre-Change Losses. 

The Debtors currently do not express any view on whether the transactions contemplated by the 

Plan will qualify for the 382(l)(5) Exception. 

The Reorganized Debtors’ use of their Pre-Change Losses after the Effective Date may be 

adversely affected if an “ownership change” within the meaning of section 382 of the Tax Code were to 

occur after the Effective Date. 

C. Certain U.S. Federal Income Tax Consequences to Certain U.S. Holders of Claims

The following discussion assumes that the Debtors will undertake the Restructuring Transactions 

currently contemplated by the Plan. Holders of Claims and Interests are urged to consult their tax 

advisors regarding the tax consequences of the Restructuring Transactions. 

1. Recapitalization Treatment - Determination of “Security” Status 

The U.S. federal income tax consequences to a U.S. Holder of a Claim will depend, in part, on 

whether the Claims surrendered constitute “securities” of Cinemex Holdings for United States federal 

income tax purposes. Whether a debt instrument constitutes a “security” for U.S. federal income tax 

purposes is determined based on all the relevant facts and circumstances, but most authorities have held 

that the length of the term of a debt instrument is an important factor in determining whether such 

instrument is a security for U.S. federal income tax purposes. These authorities have indicated that a term 

of less than five years is evidence that the instrument is not a security, whereas a term of ten years or 

more is evidence that it is a security. There are numerous other factors that could be taken into account in 

determining whether a debt instrument is a security, including the security for payment, the 

creditworthiness of the obligor, the subordination or lack thereof to other creditors, the right to vote or 

otherwise participate in the management of the obligor, convertibility of the instrument into an equity 

interest of the obligor, whether payments of interest are fixed, variable, or contingent, and whether such 

payments are made on a current basis or accrued. Holders should consult their own tax advisors 

regarding the status of their claims as securities. 

2. U.S. Federal Income Tax Consequences to U.S. Holders of Allowed Class 3, 

Class 4, Class 5, and Class 6 Claims 

There is substantial uncertainty regarding the consideration that a Holder will receive in respect 

of its Claim. Pursuant to the Plan, such consideration will depend upon, among other things, the 

resolution of Claim objections, which resolution cannot be predicted. Holders should consult with their 

own tax advisors regarding the potential tax consequences of the Plan. As a result of the foregoing, the 

following discussion is general in nature. 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 79 of 92
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Pursuant to the Plan, except to the extent that a U.S. Holder of an Allowed Class 3, Class 4, Class 

5, or Class 6 Claim (such Holders, “U.S. Plan Recipients”) agrees to a less favorable treatment in 

exchange for full and final satisfaction, settlement, release and discharge of such Claim, the U.S. Plan 

Recipient shall receive the distribution set forth in the Plan. 

To the extent that a U.S. Plan Recipient’s Allowed Claim does not qualify as a “security” of any 

of the Debtors, or if such Holder receives in respect of its claim only Cash and/or “other property,” such 

Holder of such Claim will be treated as exchanging such Claim for such Holder’s Pro Rata share of the 

consideration received pursuant to the Plan in a taxable exchange under section 1001 of the Tax Code. 

Accordingly, subject to the rules regarding accrued but untaxed interest, each Holder of such Claim 

should recognize gain or loss equal to the difference between (1) the amount of Cash and the fair market 

value of the non-consideration received and (2) such Holder’s adjusted basis, if any, in such Claim. The 

character of such gain as capital gain or ordinary income will be determined by a number of factors, 

including the tax status of the Holder, the rules regarding accrued but untaxed interest and market 

discount, whether the Claim constitutes a capital asset in the hands of the Holder, and whether and to 

what extent the Holder had previously claimed a bad debt deduction with respect to its Claim. If 

recognized gain or loss is capital in nature, it generally would be long-term capital gain if the Holder held 

its Claim for more than one year at the time of the exchange. Subject to the rules regarding accrued but 

untaxed interest, a Holder’s tax basis in the non-cash consideration received should equal the fair market 

value of such property as of the date such property is distributed to the Holder. A Holder’s holding period 

for the non-cash consideration received should begin on the day following the date it receives such 

property. 

The above discussion assumes that the distribution under the Plan is treated, for U.S. federal 

income tax purposes, as a direct distribution from the Debtors to the relevant Holders of Claims. It is 

possible that the IRS could apply a different characterization, in which case the treatment described above 

could vary. 

U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE 

RECOGNITION OF GAIN OR LOSS, FOR FEDERAL INCOME TAX PURPOSES, ON THE 

SATISFACTION OF THEIR CLAIMS. 

3. Accrued Interest 

To the extent that any amount received by a U.S. Holder of a Claim is attributable to accrued but 

untaxed interest on the debt instruments constituting the surrendered Claim, the receipt of such amount 

should be taxable to the U.S. Holder as ordinary interest income (to the extent not already taken into 

income by the U.S. Holder). Conversely, a U.S. Holder of a Claim may be able to recognize a deductible 

loss (or, possibly, a write off against a reserve for worthless debts) to the extent that any accrued interest 

previously was included in the U.S. Holder’s gross income but was not paid in full by the Debtors. Such 

loss may be ordinary, but the tax law is unclear on this point. 

If the fair value of the consideration is not sufficient to fully satisfy all principal and interest on 

Allowed Claims, the extent to which such consideration will be attributable to accrued interest is unclear. 

Under the Plan, the aggregate consideration to be distributed to Holders of Allowed Claims in each Class 

will be allocated first to the principal amount of Allowed Claims, with any excess allocated to unpaid 

interest that accrued on these Claims, if any. Certain legislative history indicates that an allocation of 

consideration as between principal and interest provided in a chapter 11 plan of reorganization is binding 

for U.S. federal income tax purposes, while certain Treasury Regulations treat payments as allocated first 

to any accrued but unpaid interest. The IRS could take the position that the consideration received by the 

Holder should be allocated in some way other than as provided in the Plan. U.S. Holders of Claims 

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should consult their own tax advisors regarding the proper allocation of the consideration received by 

them under the Plan. 

U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE 

ALLOCATION OF CONSIDERATION RECEIVED IN SATISFACTION OF THEIR CLAIMS AND 

THE FEDERAL INCOME TAX TREATMENT OF ACCRUED BUT UNPAID INTEREST. 

4. Market Discount 

Under the “market discount” provisions of the Tax Code, some or all of any gain realized by a 

U.S. Holder of a Claim who exchanges the Claim for an amount on the Effective Date may be treated as 

ordinary income (instead of capital gain), to the extent of the amount of “market discount” on the debt 

instruments constituting the exchanged Claim. In general, a debt instrument is considered to have been 

acquired with “market discount” if it is acquired other than on original issue and if its Holder’s adjusted 

tax basis in the debt instrument is less than (a) the sum of all remaining payments to be made on the debt 

instrument, excluding “qualified stated interest” or (b) in the case of a debt instrument issued with 

original issue discount, its adjusted issue price, by at least a de minimis amount (equal to 0.25 percent of 

the sum of all remaining payments to be made on the debt instrument, excluding qualified stated interest, 

multiplied by the number of remaining whole years to maturity). 

Any gain recognized by a U.S. Holder on the taxable disposition of an Allowed Claim 

(determined as described above) that was acquired with market discount should be treated as ordinary 

income to the extent of the market discount that accrued thereon while the Claim was considered to be 

held by the U.S. Holder (unless the U.S. Holder elected to include market discount in income as it 

accrued). To the extent that the Allowed Claims that were acquired with market discount are exchanged 

in a tax-free transaction for other property, any market discount that accrued on the Allowed Claims (i.e., 

up to the time of the exchange) but was not recognized by the U.S. Holder is carried over to the property 

received therefor and any gain recognized on the subsequent sale, exchange, redemption, or other 

disposition of the property is treated as ordinary income to the extent of the accrued, but not recognized, 

market discount. 

U.S. HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS CONCERNING THE 

APPLICATION OF THE MARKET DISCOUNT RULES TO THEIR CLAIMS. 

5. Limitation on Use of Capital Losses 

A U.S. Holder of a Claim who recognizes capital losses as a result of the distributions under the 

Plan will be subject to limits on the use of such capital losses. For a non-corporate U.S. Holder, capital 

losses may be used to offset any capital gains (without regard to holding periods), and also ordinary 

income to the extent of the lesser of (a) $3,000 ($1,500 for married individuals filing separate returns) or 

(b) the excess of the capital losses over the capital gains. A non-corporate U.S. Holder may carry over 

unused capital losses and apply them against future capital gains and a portion of their ordinary income 

for an unlimited number of years. For corporate U.S. Holders, capital losses may only be used to offset 

capital gains. A corporate U.S. Holder that has more capital losses than may be used in a tax year may 

carry back unused capital losses to the three years preceding the capital loss year or may carry over 

unused capital losses for the five years following the capital loss year. 

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6. U.S. Federal Income Tax Consequences to Holders of Owning and Disposing 

of Shares of New Common Stock

(a) Dividends on New Common Stock 

Any distributions made on account of the New Common Stock will constitute dividends for U.S. 

federal income tax purposes to the extent of the current or accumulated earnings and profits of the 

Reorganized Debtors as determined under U.S. federal income tax principles. “Qualified dividend 

income” received by an individual U.S. Holder is subject to preferential tax rates. To the extent that a 

U.S. Holder receives distributions that would otherwise constitute dividends for U.S. federal income tax 

purposes but that exceed such current and accumulated earnings and profits, such distributions will be 

treated first as a return of capital reducing the U.S. Holder’s basis in its New Common Stock. Any such 

distributions in excess of the Holder’s basis in its New Common Stock (determined on a share-by-share 

basis) generally will be treated as capital gain. Dividends paid to U.S. Holders that are corporations 

generally will be eligible for the dividends-received deduction, subject to applicable restrictions, so long 

as there are sufficient earnings and profits. 

(b) Sale, Redemption, or Repurchase of New Common Stock 

Unless a non-recognition provision applies, U.S. Holders generally will recognize capital gain or 

loss upon the sale, redemption, or other taxable disposition of the New Common Stock. Such capital gain 

will be long-term capital gain if at the time of the sale, exchange, retirement, or other taxable disposition, 

the U.S. Holder held the New Common Stock for more than one year. Long-term capital gains of an 

individual taxpayer generally are taxed at preferential rates. The deductibility of capital losses is subject 

to certain limitations as described below. 

7. Medicare Tax 

Certain U.S. Holders that are individuals, estates, or trusts are required to pay an additional 3.8 

percent tax on, among other things, dividends and gains from the sale or other disposition of capital 

assets. U.S. Holders that are individuals, estates, or trusts should consult their tax advisors regarding the 

effect, if any, of this tax provision on their ownership and disposition of consideration received pursuant 

to the Plan. 

D. Certain U.S. Federal Income Tax Consequences to Certain Non-U.S. Holders of 

Claims

The following discussion includes only certain U.S. federal income tax consequences of the 

Restructuring Transactions to non-U.S. Holders. The discussion does not include any non-U.S. tax 

considerations. The rules governing the U.S. federal income tax consequences to non-U.S. Holders are 

complex. Each non-U.S. Holders should consult its own tax advisor regarding the U.S. federal, state, and 

local and the foreign tax consequences of the consummation of the Plan to such non-U.S. Holders and the 

ownership and disposition of the consideration. 

Whether a non-U.S. Holder realizes gain or loss on the exchange and the amount of such gain or 

loss is generally determined in the same manner as set forth above in connection with U.S. Holders. 

1. Gain Recognition 

Any gain realized by a non-U.S. Holder on the exchange of its Claim generally will not be subject 

to U.S. federal income taxation unless (i) the non-U.S. Holder is an individual who was present in the 

United States for 183 days or more during the taxable year in which the Restructuring Transactions occur 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 82 of 92
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and certain other conditions are met or (ii) such gain is effectively connected with the conduct by such 

non-U.S. Holder of a trade or business in the United States (and if an income tax treaty applies, such gain 

is attributable to a permanent establishment maintained by such non-U.S. Holder in the United States). 

If the first exception applies, to the extent that any gain is taxable, the non-U.S. Holder generally 

will be subject to U.S. federal income tax at a rate of 30 percent (or at a reduced rate or exemption from 

tax under an applicable income tax treaty) on the amount by which such non-U.S. Holder’s capital gains 

allocable to U.S. sources exceed capital losses allocable to U.S. sources during the taxable year of the 

exchange. If the second exception applies, the non-U.S. Holder generally will be subject to U.S. federal 

income tax with respect to any gain realized on the exchange if such gain is effectively connected with the 

non-U.S. Holder’s conduct of a trade or business in the United States in the same manner as a U.S. 

Holder. In order to claim an exemption from withholding tax, such non-U.S. Holder will be required to 

provide a properly executed IRS Form W-8ECI (or such successor form as the IRS designates). In 

addition, if such a non-U.S. Holder is a corporation, it may be subject to a branch profits tax equal to 30 

percent (or such lower rate provided by an applicable treaty) of its effectively connected earnings and 

profits for the taxable year, subject to certain adjustments. 

2. Accrued and/or Imputed Interest 

Payments to a non-U.S. Holder that are attributable to accrued but untaxed interest (or to imputed 

interest with respect to delayed distributions) generally will not be subject to U.S. federal income or 

withholding tax, provided that the withholding agent has received or receives, prior to payment, 

appropriate documentation (generally, IRS Form W-8BEN or W-8BEN-E) establishing that the non-U.S. 

Holder is not a U.S. person, unless: 

• the non-U.S. Holder actually or constructively owns 10 percent or more of the total combined 

voting power of Cinemex; 

• the non-U.S. Holder is a “controlled foreign corporation” that is a “related person” with 

respect to Reorganized Debtors (each, within the meaning of the Tax Code); 

• the non-U.S. Holder is a bank receiving interest described in Section 881(c)(3)(A) of the Tax 

Code; or 

• such interest is effectively connected with the conduct by the non-U.S. Holder of a trade or 

business within the United States (in which case, provided the non-U.S. Holder provides a 

properly executed IRS Form W-8ECI (or successor form) to the withholding agent, the nonU.S. Holder (x) generally will not be subject to withholding tax, but (y) will be subject to 

U.S. federal income tax in the same manner as a U.S. Holder (unless an applicable income 

tax treaty provides otherwise), and a non-U.S. Holder that is a corporation for U.S. federal 

income tax purposes may also be subject to a branch profits tax with respect to such non-U.S. 

Holder’s effectively connected earnings and profits that are attributable to the accrued but 

untaxed interest at a rate of 30 percent (or at a reduced rate or exemption from tax under an 

applicable income tax treaty)). 

A non-U.S. Holder that does not qualify for exemption from withholding tax with respect to 

accrued but untaxed interest that is not effectively connected income generally will be subject to 

withholding of U.S. federal income tax at a 30 percent rate (or at a reduced rate or exemption from tax 

under an applicable income tax treaty) on payments that are attributable to accrued but untaxed interest. 

For purposes of providing a properly executed IRS Form W-8BEN or W‐8BEN-E, special procedures are 

provided under applicable Treasury Regulations for payments through qualified foreign intermediaries or 

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certain financial institutions that hold customers’ securities in the ordinary course of their trade or 

business. 

3. U.S. Federal Income Tax Consequences to Non-U.S. Holders of Owning 

Shares of New Common Stock

Any distributions made with respect to New Common Stock will constitute dividends for U.S. 

federal income tax purposes to the extent of the Reorganized Debtors’ current or accumulated earnings 

and profits as determined under U.S. federal income tax principles. 

To the extent that a non-U.S. Holder receives distributions that would otherwise constitute 

dividends for U.S. federal income tax purposes but that exceed such current and accumulated earnings 

and profits, such distributions will be treated first as a non-taxable return of capital reducing the Holder’s 

basis in its New Common Stock. Any such distributions in excess of a non-U.S. Holder’s basis in its 

New Common Stock (determined on a share-by-share basis) generally will be treated as capital gain from 

a sale or exchange, as discussed below. 

Except as described below, dividends paid with respect to New Common Stock held by a nonU.S. Holder that are not effectively connected with a non-U.S. Holder’s conduct of a U.S. trade or 

business (or if an income tax treaty applies, are not attributable to a permanent establishment maintained 

by such non-U.S. Holder in the United States) will be subject to U.S. federal withholding tax at a rate of 

30 percent (or lower treaty rate or exemption from tax, if applicable). A non-U.S. Holder generally will 

be required to satisfy certain IRS certification requirements in order to claim a reduction of or exemption 

from withholding under a tax treaty by filing IRS Form W-8BEN or W-BEN-E (or a successor form) 

upon which the non-U.S. Holder certifies, under penalties of perjury, its status as a non-U.S. person and 

its entitlement to the lower treaty rate or exemption from tax with respect to such payments. 

Dividends paid with respect to New Common Stock held by a non-U.S. Holder that are 

effectively connected with a non-U.S. Holder’s conduct of a U.S. trade or business (and if an income tax 

treaty applies, are attributable to a permanent establishment maintained by such non-U.S. Holder in the 

United States) generally will be subject to U.S. federal income tax in the same manner as a U.S. Holder, 

and a non-U.S. Holder that is a corporation for U.S. federal income tax purposes may also be subject to a 

branch profits tax with respect to such non-U.S. Holder’s effectively connected earnings and profits that 

are attributable to the dividends at a rate of 30 percent (or at a reduced rate or exemption from tax under 

an applicable income tax treaty). 

To the extent the FIRPTA rules (discussed below) are applicable to any Non-U.S. Holder (and 

subject to the rules discussed below regarding less-than-5% Holders if the New Common Stock is 

regularly traded on an established securities market), distributions that are taxable as dividends will be 

subject to withholding, as described above. However, distributions that are not taxable as dividends but, 

instead, are treated as a return of capital or gain will be subject to withholding on an amount of 15 percent 

of the gross amount of any such distribution. 

4. Sale, Redemption, or Repurchase of New Common Stock 

A Non-U.S. Holder generally will not be subject to U.S. federal income tax with respect to any 

gain realized on the sale or other taxable disposition (including a Cash redemption) of its Pro Rata share 

of consideration received under the Plan unless: 

• such Non-U.S. Holder is an individual who is present in the United States for 183 days or 

more in the taxable year of disposition or who is subject to special rules applicable to former 

citizens and residents of the United States; 

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• such gain is effectively connected with such Non-U.S. Holder’s conduct of a U.S. trade or 

business (and if an income tax treaty applies, such gain is attributable to a permanent 

establishment maintained by such Non-U.S. Holder in the United States); 

• in the case of the sale of New Common Stock, Reorganized Debtors are or have been, during 

a specified testing period, a “United States real property holding corporation” (a “USRPHC”) 

for U.S. federal income tax purposes; or 

• such Non-U.S. Holder receives a “flow-through” interest (including pursuant to assets held in 

a “liquidating trust”) in assets that constitutes a “U.S. real property interest” (a “USRPI”). 

If the first exception applies, the Non-U.S. Holder generally will be subject to U.S. federal 

income tax at a rate of 30 percent (or at a reduced rate or exemption from tax under an applicable income 

tax treaty) on the amount by which such Non-U.S. Holder’s capital gains allocable to U.S. sources exceed 

capital losses allocable to U.S. sources during the taxable year of disposition. If the second exception 

applies, the Non-U.S. Holder generally will be subject to U.S. federal income tax with respect to such 

gain in the same manner as a U.S. Holder, and a Non-U.S. Holder that is a corporation for U.S. federal 

income tax purposes may also be subject to a branch profits tax with respect to earnings and profits 

effectively connected with a U.S. trade or business that are attributable to such gains at a rate of 30 

percent (or at a reduced rate or exemption from tax under an applicable income tax treaty). 

If the third exception applies, the Non-U.S. Holder generally will be subject to U.S. federal 

income tax on any gain recognized on the disposition of all or a portion of its New Common Stock under 

FIRPTA and be required to file U.S. federal income tax returns. Taxable gain from the disposition of an 

interest in a USRPHC (generally equal to the difference between the amount realized and such Non-U.S. 

Holder’s adjusted tax basis in such interest) will constitute effectively connected income. Further, the 

buyer of the New Common Stock will be required to withhold a tax equal to 15 percent of the amount 

realized on the sale. The amount of any such withholding would be allowed as a credit against the NonU.S. Holder’s federal income tax liability and may entitle the Non-U.S. Holder to a refund, provided that 

the Non-U.S. Holder properly and timely files a tax return with the IRS. 

In general, while the FIRPTA provisions will not apply if (a) the Non-U.S. Holder does not 

directly or indirectly own more than 5 percent of the value of such interest during a specified testing 

period and (b) such interest is regularly traded on an established securities market, the Debtors currently 

anticipate that, as of the Effective Date, such interests will not be regularly traded on an established 

securities market. 

If the fourth exception applies, FIRPTA will generally be applicable to any such USRPI.

The Reorganized Debtors may constitute a USRPHC as of the Effective Date, in which case the 

New Common Stock will constitute a United States real property interest for the period required under the 

Tax Code. Non-U.S. Holders who may receive or acquire New Common Stock in connection with the 

Restructuring Transactions are urged to consult a U.S. tax advisor with respect to the U.S. tax 

consequences applicable to their acquisition, holding, and disposition of such New Common Stock. 

5. FATCA

Under the Foreign Account Tax Compliance Act (“FATCA”), foreign financial institutions and 

certain other foreign entities must report certain information with respect to their U.S. account Holders 

and investors or be subject to withholding on the receipt of “withholdable payments.” For this purpose, 

“withholdable payments” are generally U.S. source payments of fixed or determinable, annual or 

periodical income (including dividends (for U.S. federal income tax purposes), if any, on shares of New 

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 75 

Common Stock). FATCA withholding will apply even if the applicable payment would not otherwise be 

subject to U.S. federal nonresident withholding tax. Although FATCA withholding rules could apply to 

payments of gross proceeds from the sale or other disposition of property of a type which can produce 

U.S. source interest or dividends, proposed regulations indefinitely suspend such withholding 

requirements. 

Each non-U.S. Holder should consult its own tax advisor regarding the possible impact of these 

rules on such non-U.S. Holder. 

E. Information Reporting and Back-Up Withholding

The Debtors will withhold all amounts required by law to be withheld from payments of interest 

and dividends. The Debtors will comply with all applicable reporting requirements of the Tax Code. In 

general, information reporting requirements may apply to distributions or payments made to a Holder of a 

Claim under the Plan. In addition, backup withholding of taxes will generally apply to payments in 

respect of an Allowed Claim under the Plan unless, in the case of a U.S. Holder, such U.S. Holder 

provides a properly executed IRS Form W-9 and, in the case of non-U.S. Holder, such non-U.S. Holder 

provides a properly executed applicable IRS Form W-8 (or otherwise establishes such Non-U.S. Holder’s 

eligibility for an exemption). 

Backup withholding is not an additional tax. Amounts withheld under the backup withholding 

rules may be credited against a Holder’s U.S. federal income tax liability, and a Holder may obtain a 

refund of any excess amounts withheld under the backup withholding rules by filing an appropriate claim 

for refund with the IRS (generally, a federal income tax return). 

In addition, from an information reporting perspective, the Treasury Regulations generally 

require disclosure by a taxpayer on its U.S. federal income tax return of certain types of transactions in 

which the taxpayer participated, including, among other types of transactions, certain transactions that 

result in the taxpayer’s claiming a loss in excess of specified thresholds. Holders are urged to consult 

their tax advisors regarding these regulations and whether the transactions contemplated by the Plan 

would be subject to these regulations and require disclosure on the Holders’ tax returns. 

THE FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN ARE COMPLEX. 

THE FOREGOING SUMMARY DOES NOT DISCUSS ALL ASPECTS OF FEDERAL INCOME 

TAXATION THAT MAY BE RELEVANT TO A PARTICULAR HOLDER IN LIGHT OF SUCH 

HOLDER’S CIRCUMSTANCES AND INCOME TAX SITUATION. ALL HOLDERS OF 

CLAIMS AND INTERESTS SHOULD CONSULT WITH THEIR TAX ADVISORS AS TO THE 

PARTICULAR TAX CONSEQUENCES TO THEM OF THE TRANSACTIONS 

CONTEMPLATED BY THE PLAN, INCLUDING THE APPLICABILITY AND EFFECT OF 

ANY STATE, LOCAL, OR FOREIGN TAX LAWS, AND OF ANY CHANGE IN APPLICABLE 

TAX LAWS. 

XIII. RECOMMENDATION 

In the opinion of the Debtors, the Plan is preferable to all other available alternatives and provides 

for a larger distribution to the Debtors’ creditors than would otherwise result in any other scenario. 

Accordingly, the Debtors and the Committee recommend that Holders of Claims entitled to vote on the 

Plan vote to accept the Plan and support Confirmation of the Plan. 

Dated: [●] CINEMEX USA REAL ESTATE 

HOLDINGS, INC., CINEMEX 

Case 20-14695-LMI Doc 773 Filed 10/28/20 Page 86 of 92
 76 

HOLDINGS USA, INC., and CB THEATER 

EXPERIENCE LLC, 

Debtors and Debtors in Possession

 

/s/ Draft 

 

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09923-00001/12393739.5 

Exhibit A 

Plan of Reorganization 

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 09923-00001/12393739.5 

Exhibit B 

Corporate Organization Chart 

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 09923-00001/12393739.5 

Exhibit C 

Disclosure Statement Order 

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09923-00001/12393739.5 

Exhibit D 

Liquidation Analysis 

(and Notes) 

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09923-00001/12393739.5 

Exhibit E 

Financial Projections 

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