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UA Closes | The accounting industry expects potential buyers of theaters to take over the debt problems related to rent arrears

2021-03-09T11:04:23.205Z


The new crown pneumonia epidemic has severely hit all industries, and the film industry is definitely one of them. UA Cinemas, which has been operating in Hong Kong for 36 years and owns 6 theaters, announced the closure of all lines on Monday (8th) and applied to the High Court on the same day


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Written by: McKay and Zhang Weilun

2021-03-09 18:51

Last update date: 2021-03-09 18:51

The new crown pneumonia epidemic has severely hit all industries, and the film industry is definitely one of them.

UA Cinemas, which has operated in Hong Kong for 36 years and owns 6 theaters, announced the closure of all operations on Monday (8th) and applied to the High Court for liquidation on the same day.

According to the website of the Judiciary, the case has been scheduled for the first hearing on June 9 this year.

Li Jiaen, the vice chairman of Deloitte China, known as the "Gold Medal Liquidator", believes that even if there are potential buyers interested in UA Cinemas at this stage, it is not easy to successfully deal with debts such as rent.

And Yang Wenan, director and special consulting director of Lixin BDO, believes that UA Cinemas is not in a hurry to deal with the sale of assets. It is expected that most of the debts involve rents. Therefore, they decided to apply to the High Court for liquidation instead of convening a creditors meeting.

The UA Cinemas closed on March 8, and the High Court will conduct its first hearing on the liquidation on June 9.

The picture shows Citygate UA Cinemas.

(Photo by Lu Yiming)

Under the current laws, the winding-up procedure of a "limited company" can be divided into "voluntary shareholder winding up", "creditor voluntary winding up" and "court compulsory winding up".

HMV Hong Kong, a record retail store, failed to repay its debts in 2018, so it was voluntarily wound up, which is more familiar with the case of "voluntary shareholder winding-up".

During the liquidation period of HMV Hong Kong, stocks of vinyl records and game consoles were sold at large prices to "cash out".

Mr. Yang Wenan (right), director and special advisory director of Lixin BDO, said that in "voluntary shareholder winding up", the directors or shareholders can convene a meeting of creditors on their own to decide whether or not to wind up the company.

﹙Profile picture/Photo by Chen Jiabi﹚

Mr. Yang Wenan, Director and Special Advisory Director of Lixin B&B, explained that in "voluntary shareholder winding up", directors or shareholders can convene a meeting of creditors on their own to decide whether to wind up the company and appoint a liquidator. "You have to"; or you can apply to the court for liquidation by yourself. "The time period is at least 1 to 3 months, and then you have to explain the reasons for the liquidation to the court", and then hand it over to the Official Receiver's Office, or arrange for the liquidator to deal with it.

Yang Wenan inferred that because UA is not in a hurry to sell assets, "because the speaker and screen will not deteriorate, and there is no urgent need to sell the goods immediately if the supermarket is liquidated."

He said that it is estimated that UA Cinemas may default on the rent of the owners, so he decided to apply to the court for liquidation.

However, given the current economic environment, he believes that it will be more difficult for UA to sell its assets. "It's a pity that it doesn't sell well. Unless it's a theater."

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As some of the UA cinemas that closed their business only opened recently, some of them are located in prime locations in the downtown area, which are attractive to other businessmen who are interested in operating theaters. It is also reported that some local businessmen intend to accept them.

Li Jiaen, known as the "gold liquidator" who has handled liquidation cases such as ATV and Jin Zhizun, pointed out that in general, when a company filed a petition for liquidation, the majority of the court would approve it, and then the Official Receiver's Office would take over. Find another liquidator to take over, or the Official Receiver's Office will handle it on its own.

If a businessman is interested in a theater originally operated by UA, he needs to contact the liquidator for discussion.

Li Jiaen, Deloitte China’s vice chairman of the "Gold Medal Liquidator", does not rule out that individual UA theaters have defaulted on rent to their owners.

(Information Picture / Photo by Gao Zhongming)

If the White Samurai bid is not higher than the debt, it will not help solve the problem

Li Jiaen believes that even if a businessman takes over individual theaters originally operated by UA, it is believed that it will not be easy. On the one hand, the related industry is already in the sunset industry, and many movies are now available for watching online; on the other hand, most of the theaters are believed to be leased. For properties, it is not ruled out that individual theaters have already defaulted on the rent of the owners. If the owners mainly restore the venue, it may affect the original decoration.

Lei further pointed out that if the "white warrior" is interested in taking over, the merchant's bid is very important. If the difference between his bid and the amount of debt owed by the company is too large, it will not help solve the debt problem.

As the relevant court procedures are currently several months away, the owner still has the opportunity to request the recovery of the property, or the theater party will return the property to the owner early in order to reduce the amount of money recovered by the owner.

Under a number of conditions, it is believed that this incident may not be easy to resolve.

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Source: hk1

All news articles on 2021-03-09

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