A Canadian court ordered Cineworld Group PLC to pay 1.29 billion Canadian dollars, equivalent to about $1 billion, in damages for walking away from a merger agreement with Cineplex Inc. after the COVID-19 pandemic seriously impacted the movie theater industry worldwide. Cineworld argued that Cineplex violated the terms of a planned merger between the two companies when it took steps to conserve cash by deferring payments to landlords, vendors and film studios after box offices shut down in the early days of COVID-19’s global spread. However, an Ontario judge rejected the arguments. Cineworld, which operates the Regal cinema chain in the U.S., said it would appeal the decision and “does not expect damages to be payable whilst any appeal is ongoing.” It reported about $450 million in cash holdings as of June and previously said it expected “no material liability” to arise from the Cineplex lawsuit. The U.K.-based company warned earlier this year there was doubt about its viability as a business after it posted a $3 billion loss for 2020 because of the pandemic’s impact. Cineplex had sought US$2.2 billion in damages from Cineworld for backing out of the acquisition.
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