Cathay Cineplexes Faces S$3.4 Million Rent Demand, Risks Insolvency

Cathay Cineplexes has been served a statutory demand for S$3.4 million (US$2.7 million) related to unpaid rent for its cinema premises located in Jem. The demand was issued by the landlord's solicitors.

The demand, a formal notice to debtors, requires Cathay Cineplexes to settle the outstanding amount of S$3,446,748.26, or to secure or compromise the sum to the landlord's satisfaction, by July 22. Failure to comply with the demand will be considered as an inability to pay its debts.

Furthermore, a contractual interest rate of 1 percent per month will be applied daily to the outstanding balance from the due date until the payment date. The board of mm2 Asia, the parent company of Cathay Cineplexes, is currently seeking legal counsel regarding the matter. The Cathay Cineplexes board is also seeking legal advice.

The cinema at Jem shopping mall was previously closed on March 27 after a termination notice was issued by the landlord, DBS Trustee Limited. At the time of closure, mm2 Asia owed approximately S$4.3 million in rent. The closure was attributed to challenges faced by the cinema industry since the beginning of the COVID-19 pandemic.

Cathay Cineplexes had also received previous demands for approximately S$2.7 million in rent and other costs related to its operations at Century Square and Causeway Point. In a prior filing, mm2 Asia stated that Cathay Cineplexes owed about S$10.26 million to various landlords, with S$3.07 million backed by corporate guarantees from mm2 Asia. These liabilities were primarily due to the closure of unprofitable branches during the post-pandemic recovery and ongoing cash flow issues within the cinema business.