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SINGAPORE: Cathay Cineplexes is set to undergo creditors' voluntary liquidation amid its financial woes, operator mm2 Asia announced on Monday (Sep 1).
The board has resolved that it is no longer feasible for Cathay Cineplexes to continue operating, given its financial position and the absence of restructuring options, among other things, mm2 Asia said in a filing on the Singapore Exchange.
The cinema operator had attempted to negotiate “amicable resolutions” with the various creditors, but it was unable to arrive at "mutually agreeable restructuring outcomes" of its payment obligations owed to the creditors, it added.
The board resolved to appoint Luke Anthony Furler and Tan Kim Han of Quantuma (Singapore) as joint and several provisional liquidators.
An extraordinary general meeting of the members of Cathay Cineplexes and a meeting of the creditors will be convened in due course.
Mm2 last week reported a surge in group net loss to S$122.4 million (US$95.4 million) in the 2025 fiscal year – a substantial increase from its S$1.9 million loss in the year before.
"The second half of FY2025 was exceptionally challenging, especially with the legal and financial issues from our cinema business," said mm2 Asia executive chairman Melvin Ang then.
"We recognise our cinema landlords as valued partners in our business ecosystem. However, the road to recovery has been longer than anyone expected (and) we can understand their position."
What is creditors' voluntary liquidation?
A company can meet with its creditors to consider its proposal for a voluntary winding up of the company if it decides it is not able to pay off its debts and continue its business.
If a resolution is passed in favour of the winding up, the company will then appoint a liquidator, subject to any preference the creditors may have.
This differs from a members’ voluntary liquidation – where members or shareholders of the company pass a resolution that the company be wound up.
This is provided the directors believe that the company will be able to pay its debts in full within 12 months after the liquidation begins.
In both cases, a company’s assets are collected and sold to pay off its debts. Any money remaining after that is distributed among the company’s shareholders.
During the winding-up process, the company’s shareholders cannot transfer their shares in the company without the approval of the liquidator.
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The operator also noted that its cinema segment faces "pronounced challenges", with attendance not yet fully rebounding following COVID-19 disruptions, competition from streaming platforms and tight operating margins.
Six Cathay Cineplexes cinemas have closed in around three years, leaving four outlets still in operation. It owes landlords millions in rent.
In July, Cathay Cineplexes said it had received a letter of demand for S$577,235.58 from Resorts Concept, the licensor of its cinema units at E!Hub@Downtown East.
That same month, the landlord of Cathay Cineplexes' shuttered outlet at Jem shopping mall demanded payment of about S$3.4 million in rental arrears.
Other claimants include Century Square, Alprop and HSBC Institutional Trust Services, the trustee of Frasers Centrepoint Trust.
