UNITED STATES BANKRUPTCY COURT 

SOUTHERN DISTRICT OF FLORIDA 

MIAMI DIVISION 

www.flsb.uscourts.gov

In re: Chapter 11 

 

CINEMEX HOLDINGS USA, 

INC., 

 Case No. 20-14696-LMI 

 (Formerly Jointly Administered Under 

Reorganized Debtor. Lead Case: Cinemex USA Real Estate 

Holdings, Inc., Case No. 20-14695-

LMI) 

___________________________ / 

JOINT PRETRIAL STIPULATION 

In accordance with the Order Setting Requirements for Evidentiary Hearing by Video 

Conference and Establishing Related Deadlines (Case No. 20-14695-LMI, ECF No. 1032) and the 

Court’s direction on May 20, 2021, Cinemex Holdings USA, Inc. (the “Reorganized Debtor”) and the 

Khan Parties1 stipulate to the following facts as admitted and requiring no proof at trial, and outline 

the disputed facts and law applicable to the disputed Objection to Claim (Case No. 20-14695-LMI, 

ECF No. 482): 

I. STIPULATED UNDISPUTED FACTS

 In accordance with the Order Setting Requirements for Evidentiary Hearing by Video 

Conference and Establishing Related Deadlines (Case No. 20-14695-LMI, ECF No. 1032), Cinemex 

Holdings USA, Inc. (the “Reorganized Debtor”) and the Khan Parties stipulate that the following facts 

are admitted and require no proof at trial: 

1. Star Cinema Grill (“SCG”) is a Houston-based dine-in movie theater company 

owning the equity interests in nine dine-in theatres in Texas, one in Illinois. One dine-in theatre 

 

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 The Khan Parties are: Omar Khan (“Mr. Khan”), S.C.G.C. Inc., S.C.G.M. Inc., SCG-B Inc., SCG-VP Inc., District 

Theaters Inc., SCG-WR LLC, SCG-CS Inc., SCGK Inc., SCG-CS Inc., SCG-WL Inc., and SCG-N Inc. (the 

“Companies”). 

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in Texas is in the development stage. 

2. Each dine-in theatre is owned by a separate corporation or limited liability 

company wholly owned by Mr. Khan. 

3. In early December 2019, the Khan Parties hired PJ Solomon, an investment bank 

and financial advisor, to advise on and possibly conduct a process for the sale of Khan’s equity 

interests in the Companies. 

4. In December 2019, Mr. Rich Brail of PJ Solomon contacted José Marti, then 

President and CEO of Cinemex USA Holdings, Inc. and its subsidiaries, Delaware corporations 

that own and operate movie theaters in the United States (“Cinemex”), to inquire as to whether 

Cinemex was interested in a possible purchase of 100% of the equity in the Companies. 

5. On December 19, 2019, PJ Solomon sent Cinemex the “Phase I Process Letter” 

providing it with a confidential information memorandum and soliciting a non-binding offer. 

6. On January 14, 2014, Cinemex made a non-binding offer of $87.5 million. 

7. On January 15, 2020, PJ Solomon invited Cinemex to provide names for access 

to the virtual data room. 

8. On January 21, 2020, Cinemex provided a list of names for access to the data 

room. 

9. PJ Solomon provided those personnel designated byCinemex with access to a data 

room. A proposed equity purchase agreement prepared by the Khan Partie’s counsel was 

included in the virtual data room. 

10. On February 5–6, 2020, representatives of Cinemex traveled to Houston for 

management meetings and tours of all of the Texas theaters. The Cinemex representatives that 

attended the management meeting were Luis Castelazo, CFO, Javier Ezquerro, COO, Ximena 

Carreno, General Counsel, Alejandro Muhech, head of construction, Rogeio Velez, CEO, and 

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Jose Marti, chief development officer. Not all of those individuals attended all of the tours. 

11. On February 18, 2020, PJ Solomon circulated a Phase II Process Letter to all 

potential purchasers. soliciting binding offers by noon on March 3, 2020. . 

12. On March 3, 2020, Cinemex made a binding offer of $75 million. 

13. On March 6, 2020, Cinemex increased its binding offer to $83 million. On March 

6, 2020, the parties entered into an exclusivity agreement, whereby the parties agreed to negotiate 

exclusively through 11:59 p.m. on March 10, 2020. 

14. On March 10, 2020, SCG and Cinemex USA Real Estate Holdings, Inc. and 

Cinemex Holdings USA, Inc. entered into two equity purchase agreements with the Khan Parties 

whereby Cinemex would purchase 100% of the equity held by Mr. Khan in the Companies (the 

“Agreement”). Neither CB Theater Experience LLC (“CB”) nor Grupo Cinemex S.A. de C.V. 

(“Grupo”) is a party to either equity purchase agreement. 

15. That same day, on March 17, 2020, Cinemex put travel restrictions in place for its 

employees. On March 24, 2020, the Khan Parties’ counsel sent Cinemex’s counsel an email 

asserting that “each of the Buyer’s closing conditions set forth in Section 8.1 of the EPA had 

been satisfied” and “the Closing is to take place no later than the 2nd business day following the 

satisfaction(or waiver) of the closing conditions set forth in Article 8 of the EPA.” 

16. That same day, Cinemex’s counsel responded, indicating that “[a]mong other 

things, Cinemex’s operations and finance teams lack pre-Closing access to the Star Cinema 

Theaters and the Corporate Employees managing those theaters.” 

17. On March 25, 2020, the Khan Parties’ counsel served on Cinemex a letter. 

18. On March 26, 2020 Cinemex’s counsel responded by letter. 

19. On April 1, 2020, Mr. Khan and the Companies filed a verified complaint in the 

U.S. District Court for the Southern District of Texas. 

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II. DISPUTED FACTS TO BE LITIGATED 

In accordance with the Order Setting Filing and Disclosure Requirements for Pretrial and 

Trial, the Reorganized Debtor and the Khan Parties stipulate that the following are disputed facts to 

be litigated: 

1. Whether the Phase II Process Letter PJ Solomon circulated to all potential 

purchasers on February 18, 2020 indicates that “[i]nspections are expected to occur after signing 

of an Agreement.” Debtors’ Ex. 23 (emphasis added). 

2. Whether the Agreement provided that the parties had until April 30, 2020 to close 

the transaction for the ten Texas companies, and until May 31, 2020 to close the transaction for 

the one Illinois company. Debtors’ Exs. 51, 52. 

3. Whether on March 17, 2020, SCG announced that it would be temporarily closing 

all SCG Theatres “in accordance with local government direction and recommendations.” 

Debtor’ Ex. 41 

4. Whether as of March 24, 2020, or any date thereafter, a physical inspection had 

occurred. 

5. Whether on or about March 20, 2020, Mr. Khan offered to provide Cinemex a 

discount on the final price to proceed to close without a physical inspection. 

6. Whether COVID-19 had a Material Adverse Effect based on the terms of the 

Agreement. 

7. Whether COVID-19 was excluded or carved out from any determination of a 

Material Adverse Effect under the Agreement. 

8. Whether SCG provided Cinemex with “reasonable access to and the right to 

inspect all of the properties, assets, premises, books and records, contracts, agreements and other 

documents and data related to the Company Group” as provided in Section 7.2 of the Agreement. 

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9. Whether SCG provided Cinemex with reasonable access to interviewing and 

transitioning employees. 

10. Whether any or all of the express or implied conditions precedent to closing were 

met. 

11. Whether any or all of the conditions precedent to closing were satisfied, waived, 

or excused. 

12. Whether Cinemex used “reasonable best efforts” to cause the closing conditions 

to be satisfied as contemplated by Section 7.4 of the Agreement. 

13. Whether Cinemex used “commercially reasonable efforts” to cause the Closing to 

occur. 

14. Whether the exceptions or carve-outs to the Material Adverse Effect clause 

prevented the failure of any condition to Closing. 

15. Whether the exceptions or carve-outs to the Material Adverse Effect clause 

prevented, waived or excused any condition to Closing. 

16. Whether Mr. Khan or the Companies were excused from any of the Covenants 

under Article 7 of the Agreement. 

17. Whether the Khan Parties provided Cinemex reasonable access as provided for 

under Section 7.2(A). 

18. Whether Cinemex frustrated any closing conditions, warranties, or other 

requirements of the Agreement. 

19. Whether the Khan Parties frustrated any closing conditions, warranties, or other 

requirements of the Agreement. 

20. Whether the Khan Parties used reasonable efforts to cause the closing conditions 

to occur as required by the Agreement. 

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21. Whether Cinemex had a right to inspect the premises prior to and/or at Closing. 

22. Whether Cinemex had a right to a physical closing in Houston. 

23. Whether a physical closing in Houston was a condition to Closing. 

24. Whether the lack of a physical closing justified a material breach of the 

Agreement. 

25. Whether the representations and warranties contained in Sections 5.16 and 5.7 of 

the Agreement were satisfied in light of Section 7.4 of the Agreement or excused under Article 

8. 

26. Whether Cinemex had reasonable access to and the right to inspect within the 

meaning of Section 7.2(A) of the Agreement. 

27. Whether Cinemex used reasonable best efforts to cause any conditions to Closing 

to be satisfied. 

28. Whether Cinemex had reasonable access to Corporate Employees in light of 

Section 7.9(A) of the Agreement. 

29. Whether any exceptions or carveouts to the Material Adverse Effect clause 

prevented any failure of closing conditions or alleged breach of any representation and/or 

warranty. 

30. Whether any exceptions or carveouts to the Material Adverse Effect clause 

excused any failure of closing conditions or alleged breach of any representation and/or warranty. 

31. Whether Cinemex is entitled to rely on any failure of any condition in light of 

Section 8.3 of the Agreement. 

32. Whether the Khan Parties used commercially reasonable efforts as contemplated 

under Section 7.1(A) of the Agreement or whether any such obligations were excused. 

33. Whether the Khan Parties used commercially reasonable efforts as contemplated 

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under Section 7.1(A) of the Agreement or whether any such obligations were waived. 

34. Whether any travel restrictions lawfully prevented Cinemex from traveling to 

Houston. 

35. Whether the Khan Parties satisfied the representations and warranties contained 

in Section 5.16 of the Agreement because of limitations on the “Company Group Permits” or 

were excused. 

36. Whether the representations and warranties contained in Section 5.16 of the 

Agreement were excused, satisfied, or waived. 

37. Whether the Khan Parties satisfied the representations and warranties contained 

in Section 5.16 of the Agreement requiring that they operate the theaters and “carry on [their] 

business” or were excused. 

38. Whether the representations and warranties contained in Section 5.16 of the 

Agreement were excused, satisfied or waived. 

39. Whether the Khan Parties satisfied the condition precedent that the representations 

and warranties contained in Sections 5.7 and 5.7(F) of the Agreement were true and correct as of 

the closing in isolation and in light of Section 7.4 or excused under Article 8 of the Agreement. 

40. Whether any inability of the Khan Parties to operate the theaters, layoffs of 

employees, and unique characteristics had a “Material Adverse Effect,” as defined by the 

Agreement, and whether the Khan Parties provided reasonable access to property and employees, 

as required by Sections 7.1, 7.4 and 7.9 of the Agreement. 

41. Whether the Khan Parties satisfied their obligations to affirm as truthful each and 

every of their representations and warranties, as required by the Agreement. 

42. Whether the Khan Parties’ failure to affirm as truthful any representations and 

warranties as of the time of closing had a “Material Adverse Effect,” as defined by the 

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Agreement. 

43. Whether the Khan Parties’ representations and warranties were true at the time of 

the closing. 

44. Whether the representation that the Companies were authorized to operate their 

business and no “Material Adverse Effect” (“MAE”) as defined in the Agreement had occurred 

was true at the time of closing.

45. Whether the representation that the Companies were authorized to operate their 

business and no “Material Adverse Effect” (“MAE”) as defined in the Agreement had occurred 

was true at the time of closing or was otherwise satisfied, excused, or waived.

46. Whether the proximate cause of any loss of revenue, damages, or other 

recognizable claim incurred by the Khan Parties resulted from events or actions other than the 

alleged breach of the Agreement by Cinemex such as government-issued travel restrictions, 

closure orders, stay-home orders, management failures, failure of mitigation, adverse credit 

histories for the Khan Parties, excessive leverage or debt, negative credit history, involuntary 

liens, tax liabilities, or other attributes of Omar Khan as the sole owner of the Companies. 

47. Whether any loss of goodwill or standing in the marketplace incurred by the Khan 

Parties was caused by the Khan Parties’ involvement in extra-contractual events and 

circumstances such as but not limited to lawsuits alleging that the Khan Parties violated federal 

labor laws, misused insurance proceeds from Hurricane Ike, government-issued travel 

restrictions, closure orders, Omar Khan’s flamboyant lifestyle, or stay-home orders. 

III. ISSUES OF LAW TO BE LITIGATED 

 In accordance with the Order Setting Filing and Disclosure Requirements for Pretrial and 

Trial, the Reorganized Debtors and the Khan Parties stipulate that the following are issues of law to 

be litigated: 

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1. Whether the necessary conditions precedent to closing under the Agreement were 

satisfied, waived, or excused. 

2. Whether Cinemex repudiated the Agreement. 

3. Whether Cinemex breached the Agreement. 

4. Whether the Khan Parties satisfied Section 8.1(A) of the Agreement as a condition 

precedent to closing. 

5. Whether any of the conditions precedent to closing under Section 8.1 of the 

Agreement were excused and/or waived. 

6. Whether the Khan Parties satisfied Section 8.1(B) of the Agreement as a condition 

precedent to closing. 

7. Whether any supplements to the Agreement amended the Agreement under 

Section 12.10 of the Agreement. 

8. Whether “Company Group Permits” includes any governmental order to limit 

gatherings of not more than 10 people. 

9. Whether the exceptions or carveouts to the Material Adverse Effect provision 

prevent any violation of any representation or warranty under Article 8 of the Agreement. 

10. Whether any performance owed by the Khan Parties was excused by the Debtors’ 

repudiation and/or breach. 

11. Whether the parties satisfied Section 7.4 of the Agreement as a fundamental 

undertaking as well as a condition precedent to closing. 

12. Whether Section 3.1 of the Agreement provided Cinemex with the right to 

physically close in Houston. 

13. Whether a physical closing in Houston was a condition to Closing. 

14. Whether a physical inspection at closing was a condition to Closing. 

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15. Whether the carve outs to the Material Adverse Effect clause in the Agreement 

prevent a determination of frustration of purpose or impossibility of performance. 

16. Whether Cinemex was obligated to Close no later than the second Business Day 

after satisfaction or waiver of the conditions set forth in Article 8 of the Agreement. 

17. Whether Cinemex was entitled to a physical inspection at Closing under Section 

3.2 of the Agreement. 

18. Whether Article 3 of the Agreement provided Cinemex with a right to conduct a 

physical inspection at Closing. 

19. Whether Cinemex waived the right to rely upon any failure of access under 

Sections 7.2 or 7.9 of the Agreement as a basis to refuse to close. 

20. Whether Cinemex waived the right to a physical closing in Houston. 

21. Whether Cinemex waived the right to enforce any covenants under Article 7 of 

the Agreement. 

22. The purpose of the Agreement as contemplated by Articles 2 and 3 of the 

Agreement. 

23. Whether Cinemex’s breach of the Agreement excused Mr. Khan and the 

Companies from any performance owed either as a condition to or at Closing. 

24. Whether the government orders seeking to reduce the spread of COVID-19, the 

layoffs of virtually all of the Companies’ employees, the closure of all of the theaters, the refusal 

to accommodate a physical inspection and transition to management, the refusal to delay closing 

to accommodate travel and workplace restrictions constitute a “Material Adverse Effect” 

25. Whether the Khan Parties satisfied Sections 7.2 and 7.9 of the Agreement. 

26. Whether the Khan Parties satisfied the representations and warranties contained 

in Sections 5.16 and of the Agreement or were excused under Article 8 of the Agreement. 

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27. Whether the frustration of purpose doctrine would exclude obligations to perform 

under the Agreement. 

28. Whether the extent and duration of COVID and/or the pandemic were reasonably 

foreseeable at the time of formation of the Agreement. 

29. The extent to which the Khan Parties are entitled to any damages. 

30. Whether the impossibility doctrine would exclude obligations to perform under 

the Agreement. 

31. Whether the Khan Parties’ inability to operate the theaters, layoffs of virtually all 

employees, and inability or refusal to carry on the business in the ordinary course had a “Material 

Adverse Effect,” as defined by the Agreement, and the inherent falsity of this representation as 

of the Closing Date caused one or more conditions precedent to fail. 

32. Whether Cinemex may rely on the failure of any condition to Close if such failure 

was caused by CInemex’s failure to use commercially reasonable efforts, as required by Section 

7.4. 

33. Whether the Khan parties suffered material and disproportionate impacts of any 

conditions, events, changes, crisis and disasters, taken as a whole, as compared to other industry 

participants after the date of the Agreement. 

34. Whether the Business was operated in the Ordinary Course. 

35. Whether the definition of Ordinary Course is limited to past business practices. 

36. Whether the Khan Parties breached the EPA by declaring a repudiation by 

Cinemex. 

 

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We, Patricia B. Tomasco of Quinn Emanuel Urquhart & Sullivan, LLP, attorney for the 

Reorganized Debtor, and Michael D. Seese of Seese, P.A., attorney for the Khan Parties, certify that 

we have met to discuss settlement and that a good faith settlement attempt has been made. 

STIPULATED AND AGREED TO BY:

/s/ Patricia B. Tomasco /s/ Michael D. Seese

Patricia B. Tomasco (admitted pro hac vice) Michael D. Seese 

Quinn Emanuel Urquhart & Sullivan, LLP Seese, P.A. 

711 Louisiana, Suite 500 FBN 997323 

Houston, Texas 77002 Seese, P.A. 

Telephone: 713-221-7000 101 NE 3rd Avenue 

Facsimile: 713-221-7100 Suite 1270 

Email: pattytomasco@quinnemanuel.com Fort Lauderdale, FL 33301 

 Tel. (954) 745-5897 

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