Cineplex Inc. says it has won a court battle against a U.K. theatre giant that was due to purchase the Canadian cinema company before the COVID-19 pandemic struck.
Toronto-based Cineplex announced Thursday evening that the Ontario Superior Court of Justice ruled in its favour in a breach of contract lawsuit against its former suitor Cineworld Group PLC.
Judge Barbara Conway awarded damages of $1.24 billion and denied a counterclaim by Cineworld, Cineplex said.
“We are pleased that the court found Cineplex acted properly throughout this difficult period in our history,” said Cineplex president and CEO Ellis Jacob in a statement.
But Cineworld isn’t giving up. Shortly after Cineplex announced its victory, Cineworld acknowledged the ruling and noted that the court had also ordered it to pay $5.5 million for lost transaction costs.
“Cineworld disagrees with this judgment and will appeal the decision,” the company said in a statement.
“Cineworld does not expect damages to be payable whilst any appeal is ongoing.”
The acrimony between the two cinema chains began when Cineworld walked away from its deal to acquire Cineplex in June 2020.
By then, the pandemic was in full swing and theatre operators in many corners of the globe had been forced to close cinemas.
Cineplex and Cineworld reported massive losses and turned to layoffs to save any cash they could as bills from landlords, studios and concession stand suppliers came due.
As the companies navigated the crisis and awaited final approvals from Canadian regulators for their deal, Cineworld backed out of the takeover, alleging the company it was due to buy was responsible for “material adverse effects and breaches.”
Cineplex chalked up the adverse effects Cineworld was blaming it for as “nothing more than a case of buyer’s remorse” and decided to sue its former suitor for more than $2.18 billion in damages.
Cineworld filed a counter claim valued at about $54.8 million.
The court was left to decide whether Cineworld had the right to terminate the takeover agreement it signed with Cineplex in December 2019 without payment.
Cineworld argued it was free to walk away from the deal 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.
“Ordinary course” is a legal term that often features in acquisition agreements when companies want to ensure they will have the ability to terminate a deal and limit their risks, if other parties deviate wildly from their current operations or business model.
In response to Cineworld’s claims, Cineplex argued it fulfilled all of its obligations and continued with an “ordinary course” for the industry during the pandemic.
It said the deferred payments to landlords, film distributors and suppliers were the norm for the industry during COVID-19 and introduced testimony from studio and real estate executives, who said the delays had not strained their relationship with Cineplex.
Cineplex also claimed that Cineworld did not have grounds to terminate the deal because there was a clause exempting outbreaks of illness or changes affecting the motion picture theatre industry from being considered “material adverse effects.”
Cineworld, however, felt the clause should have no bearing on the case because it claimed it terminated the contract because of Cineplex’s inactions rather than COVID-19.
The case was seen by some observers as potentially precedent-setting for other companies that may be embroiled in their own litigations over abandoned acquisitions and material adverse effects caused by the COVID-19 pandemic.
This report by The Canadian Press was first published Dec. 14, 2021.
China cuts rates on policy loans for first time since April 2020 – CNBC
China’s central bank on Monday cut the borrowing costs of its medium-term loans for the first time since April 2020, defying market expectations, to cushion any economic slowdown.
The People’s Bank of China (PBOC) said it was lowering the interest rate on 700 billion yuan ($110.19 billion) worth of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85% from 2.95% in previous operations.
Thirty-four out of the 48 traders and analysts, or 70% of all participants, polled by Reuters last week predicted no change to the MLF rates, although a rising number of market participants start to forecast a rate cut.
With 500 billion yuan worth of MLF loans maturing on Monday, the operation resulted a net 200 billion yuan of fresh fund injections into the banking system.
The central bank also lowered the borrowing costs of seven-day reverse repurchase agreements, or repos, by the same margin to 2.10% from 2.20%, when it offered another 100 billion yuan worth of reverse repos into the banking system on the day, compared with 10 billion worth of such short-term liquidity tool due on Monday.
Credit Suisse chairman resigns after company probe – BBC News
The chairman of global banking giant Credit Suisse, Antonio Horta-Osorio, has resigned with immediate effect after an internal company probe.
He was reportedly found to have broken the UK’s Covid-19 quarantine rules.
The former boss of Lloyds Banking Group joined Credit Suisse after a series of scandals at the Swiss bank.
Now, Mr Horta-Osorio, who was the chairman of Credit Suisse for less than a year, has been replaced by board member Axel Lehmann.
“I regret that a number of my personal actions have led to difficulties for the bank and compromised my ability to represent the bank internally and externally,” Horta-Osorio said in a statement issued by the bank.
“I therefore believe that my resignation is in the interest of the bank and its stakeholders at this crucial time,” he added.
Last month, it was reported by the Reuters news agency that a preliminary investigation by Credit Suisse had found that Mr Horta-Osorio had breached Covid-19 rules.
He reportedly attended the Wimbledon tennis finals in July at a time when the UK’s Covid-19 rules required him to be in quarantine.
Speaking to the BBC, a spokesperson for Credit Suisse said that the bank would give no further details on Mr Horta-Osorio’s resignation other than those in its statement.
They also said that there were no plans to release the findings of the investigation.
Before joining Credit Suisse Mr Horta-Osorio was chief executive of British lender Lloyds Banking Group.
He was brought in to lead Switzerland’s second-largest bank to help clean up a corporate culture marred by its involvement with collapsed investment company Archegos and insolvent supply chain finance firm Greensill Capital.
In February 2020, then-Credit Suisse chief executive Tidjane Thiam resigned after a scandal revealed the bank had spied on senior employees.
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UK government to cut funding for BBC – Mail on Sunday report
Britain’s government will cut the BBC’s funding by ordering a two-year freeze on the fee that people pay to watch the broadcaster, the Mail on Sunday reported.
The future of the licence-payer funded British Broadcasting Corporation is a perpetual topic of political debate, with Prime Minister Boris Johnson’s government most recently suggesting its funding needs to be reformed.
Set against an inflation rate expected to reach a 30-year high of 6% or more in April, freezing the licence cost at its current 159 pounds ($217.40) would provide some relief to consumers battling sharply rising costs of living.
But it would also be a large blow to the BBC’s finances as it tries to compete with privately funded news outlets and the likes of Netflix and other entertainment streaming services funded by consumer subscriptions.
In November, the government launched negotiations to agree how much the TV licence would cost, part of a five year funding settlement due to begin in April 2022.
The Digital, Media, Culture and Sport department declined to comment when asked about the Mail on Sunday report.
Culture secretary Nadine Dorries said that the licence fee settlement would be the last such agreement and tweeted a link to the Mail on Sunday article.
“Time now to discuss and debate new ways of funding, supporting and selling great British content,” she said on Twitter.
The BBC declined to comment on Dorries’ tweet or the Mail on Sunday report.
The opposition Labour Party said the funding cut was politically motivated.
“The Prime Minister and the Culture Secretary seem hell-bent on attacking this great British institution because they don’t like its journalism,” said Lucy Powell, Labour lawmaker and culture policy chief.
The BBC’s news output is regularly criticised by UK political parties. Its coverage of Brexit issues – central to Johnson’s government – has long been seen as overly critical by supporters of leaving the European Union.
Last week, one Conservative lawmaker said BBC coverage relating to parties in Johnson’s Downing Street residence during coronavirus lockdowns amounted to a “coup attempt” against the prime minister.
($1 = 0.7314 pounds)
(Reporting by William James. Editing by Jane Merriman)
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