CMX Cinemas got a Houston federal judge to pause a lawsuit claiming it’s using the coronavirus “as a pretext for walking away from” a deal to acquire a movie theater chain, a few days after it filed for Chapter 11 in a move the chain’s owner blasted as a bad-faith stunt.
Judge Andrew S. Hanen stayed the case indefinitely, noting in an order docketed Tuesday, April 28, that a bankruptcy petition automatically suspends other suits involving the filer, reported Bloomberg Law.
CMX parent Cinemex Holdings initiated Chapter 11 proceedings April 25 in the US Bankruptcy Court for the Southern District of Florida, then sought the same day to halt a lawsuit by Houston businessman Omar Khan asking the US District Court for the Southern District of Texas to keep their deal on track. A hearing had been set for April 27.
Hanen’s ruling came a day after Khan—owner of the 11-location Star Cinema Grill chain that Cinemex was set to buy—assailed that move, even as he acknowledged he saw no way around the automatic stay.
“Once it was clear that CMX’s delay tactics, ever-changing legal counsel, and posturing would not achieve its goal of pushing back the evidentiary hearing, CMX decided to use the US bankruptcy laws as a last resort,” he wrote April 27. “The timing of CMX’s bankruptcy itself is questionable, at best.”
Full Content: Bloomberg
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