(Toronto) Cineplex has filed a cross-appeal seeking higher alternative damages if a court overturns a decision that forced Cineworld, a former suitor for the movie theater company, to pay it $1.24 billion.
Updated yesterday at 2:21 p.m.
In documents filed with the Ontario Court of Appeal, Cineplex argues that it should be awarded more than $2.8 billion in damages due to its decline in value and loss of performance after Cineworld decided to end a $2.18 billion deal to acquire it in June 2020.
If the court rules in favor of Cineworld, Toronto-based Cineplex wants the British cinema giant to give up the $1.1 billion in benefits it received when the acquisition was terminated.
Cineplex, which declined to comment on the matter because it is before the courts, said an assignment of those funds should be ordered to “prevent Cineworld from profiting from its wrongdoings, while Cineplex is left without sufficient redress.” .
Cineworld said in a statement that it disagrees with the cross-appeal, but will respond to it and will not pay any compensation while the case is pending.
Cineplex’s request comes in response to an appeal Cineworld filed earlier this month that claimed Judge Barbara Conway made “extractable errors of law” when she ruled in favor of Cineplex in December.
The lawsuit presided over by Judge Conway stemmed from Cineworld’s decision in June 2020 to terminate the agreement to acquire Cineplex, as the sale was about to close and the COVID-19 pandemic raged.
Cineworld Group argued it was free to break the deal because Cineplex deferred its accounts payable for at least 60 days, cut spending to the ‘bare minimum’ and stopped paying owners, movie studios , film distributors and suppliers at the start of the pandemic.
In response, Cineplex called Cineworld’s complaints “nothing more than a case of buyer’s remorse”.
Cineplex said the actions Cineworld accuses it of were part of the normal course of business for movie companies during a pandemic and did not damage its reputation with owners and studios.
On December 14, Judge Conway sided with Cineplex and dismissed Cineworld’s counterclaims.
Justice Conway’s ruling and other appeals are being watched closely by the legal community, as many believe they will reveal how judges will handle pandemic-affected settlements that end in litigation.
The deal is key for Cineplex and Cineworld as both chains have seen their coffers emptied as movie theaters close, capacity restrictions and staff layoffs as public health officials and governments try to slow the spread of the virus.