Cineplex accuses Cineworld of bad faith in day one of hearings over abortive takeover

Cineplex Inc. says a U.K. theatre giant acted in bad faith by delaying a takeover deal of the Canadian company and hoping it would default during the pandemic, a judge heard at the opening of its trial against Cineworld Group PLC.

Toronto-based Cineplex is seeking to recoup $2.18 billion in damages from Cineworld after the company walked away from the December 2019 deal amid a strict COVID-19 lockdown in June 2020. "Cineplex did what all other affected businesses, including Cineworld and its other peers, did," Alan Mark, a lawyer representing Cineplex, said in opening remarks Monday in the case being heard by the Ontario Superior Court of Justice. "These actions were consistent with Cineplex's obligations under the arrangement agreement to preserve the value of its business during the interim period." Cineworld is arguing it had the right to terminate the agreement without payment because Cineplex strayed from "ordinary course," when it deferred its accounts payable by at least 60 days, reduced spending to the "bare minimum" and stopped paying landlords, movie studios, film distributors and suppliers at the start of the pandemic.