Cineworld faces court battle over unpaid rent

Cineworld is among a raft of firms which have refused to pay rent during the coronavirus crisis

Cineworld is facing a court battle after one of its landlords launched legal action against the cinema chain over unpaid rent.

Cineworld, the world’s second largest cinema chain, is understood to be withholding rent from property firm AEW UK as the pandemic continues to hammer the film sector and dents demand among cinemagoers.

It is among a raft of firms which have refused to pay rent during the coronavirus crisis, with companies including Sports Direct, Boots, Travelodge among which have withheld payments either partially or in full.

Court filings show that AEW UK, which has £1.8bn assets under management, has now filed a legal challenge against Cine-UK, a UK subsidiary of Cineworld.

In March, ministers introduced a three-month ban on landlords taking debt enforcement action and issuing winding up petitions against commercial tenants unable to pay rent.

The moratorium has since been extended to September 30, and has drawn frustration among landlords which are unhappy with the way the rules are being interpreted.

However, the rules do not prevent landlords from taking steps to force tenants to pay rent withheld because of the lockdown.

It is a further blow to Cineworld after it walked away from plans to snap up Canadian rival Cineplex for $1.6bn, citing coronavirus-related concerns. The pair are now suing each other.

Meanwhile, Cineworld and its peers are suffering a dearth of content as film studios delay the release of blockbusters such as Christopher Nolan’s Tenet. Earlier this month Disney revealed it would bypass cinemas and make its hotly-anticipated live action remake of Mulan available to streaming subscribers for $29.99.

A tough trading environment and questions over how its legal spat with Cineplex will pan out means Cineworld’s shares are now trading over 75pc lower since the start of the year.

Cineworld and AEW UK declined to comment.