United States Bankruptcy Court Southern District of Florida Miami Division
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Case 20-14695-LMI Doc 307 Filed 06/22/20 Page 1 of 22 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA MIAMI DIVISION www.flsb.uscourts.gov In re: CINEMEX USA REAL ESTATE Chapter 11 HOLDINGS, INC., CINEMEX HOLDINGS USA, INC., and CB Case No. 20-14695-LMI THEATER EXPERIENCE LLC,1 (Jointly Administered) Debtors. / DEBTORS’ RESPONSE IN OPPOSITION TO MOTION FOR RELIEF FROM STAY FILED BY SHERMAN WILLIAMS [ECF NO. 129] Cinemex USA Real Estate Holdings, Inc. (“Cinemex Real Estate”), Cinemex Holdings USA, Inc. (“Cinemex Holdings”), and CB Theater Experience LLC (“CB Theater” and, with Cinemex Real Estate and Cinemex Holdings, the “Debtors” or “Cinemex”) by and through their undersigned counsel, file this Response in Opposition to Motion for Relief from Stay Filed by Sherman Williams [ECF No. 129] and the Supplement thereto [ECF No. 137] (together, the “Motion”), and in support thereof, states as follows: Preliminary Statement The Motion seeks relief that is both premature and unjustified. Mr. Williams seeks stay relief to “finish my upcoming mediation meeting with Cinemex” [ECF Nos. 129, 137], but no mediation has been scheduled. The Florida Commission on Human Relations (“FCHR”) has only “invite[d]” the parties to participate in a mediation and to complete forms if desired to start 1 The Debtors in these cases and the last four digits of each Debtor’s federal tax identification number are as follows: (1) Cinemex USA Real Estate Holdings, Inc. (2194); (2) Cinemex Holdings USA, Inc. (5502); and (3) CB Theater Experience LLC (0563). The address for the Debtors is 175 South West 7th Street, Suite 1108, Miami, Florida 33131. 00608837.DOCX 6 Case 20-14695-LMI Doc 307 Filed 06/22/20 Page 2 of 22 the mediation process. [ECF No. 137 at page 3 of 3]. The Debtors have not agreed to mediation, and—in the interest of focusing on the restructuring tasks at hand—do not intend to agree to mediation. This bankruptcy case is still in its very early stages, and lifting the automatic stay now would frustrate the core purpose of the automatic stay by distracting the Debtors’ very limited remaining managerial staff and diverting critical resources away from this proceeding, all at a time when the Debtors and their few personnel need to be singularly focused on restructuring and reopening their businesses. On about May 11, 2020, Mr. Williams filed a proof of claim against the Debtors, a copy of which is attached hereto as Exhibit A [Claim No. 6-1] (the “Proof of Claim”). The Debtors suggest that the claims allowance process provides the more appropriate vehicle to address the issues raised in the Motion. Accordingly, in the interest of the Debtors and all of the creditors of their estates, the Court should deny the Motion. BACKGROUND A. Bankruptcy Case Generally 1. On April 25, 2020 (the “Petition Date”), the Debtors commenced the instant cases upon the filing of voluntary petitions under the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Florida.2 2. The Debtors are operating their business and managing their assets as debtors in possession pursuant to 11 U.S.C. §§ 1107 and 1108. As of the date hereof, no trustee or examiner has been requested in these chapter 11 cases. For a detailed description of the Debtors and their operations, the Debtors respectfully refer the Court and parties in interest to the 2 CB Theater filed its petition on April 26, 2020. 00608837.DOCX 6 2 Case 20-14695-LMI Doc 307 Filed 06/22/20 Page 3 of 22 Declaration of Jose Leonardo Marti in Support of Chapter 11 Petition and First Day Motions [ECF No. 47] (the “First Day Declaration”). 3. The Debtors are in the movie theater business. First Day Declaration ¶ 9. They operated 41 movie theaters in dozens of cities in 12 states, including Florida, Alabama, Colorado, Georgia, Illinois, Maryland, Minnesota, New Jersey, New York, North Carolina, Ohio, and Virginia. Id. The theaters operate under the brand name “CMX Cinemas.” Id. The Debtors’ attention is now focused on rejecting unprofitable locations, renegotiated leases on their remaining locations to address the cataclysmic effect of the COVID-19 pandemic on their ability to operate profitably, and negotiating with their creditors to achieve a consensual reorganization. B. Williams’ Claims Generally 4. The Motion itself does not provide much information about Mr. Williams’ claims, but it attaches a Public Accommodation Complaint of Discrimination filed with the FCHR (the “Complaint”). [ECF No. 37 at page 2 of 3]. 5. According to the Complaint, Mr. Williams alleged that he was discriminated against on account of his race and gender. He alleged that he was in a theater at the Brickell City Center location in Miami, Florida when an employee asked to see his ticket and he could not locate it. He alleged that he left the theater and showed security staff a video of his ticket. He alleged that he was not allowed back into the theater to finish watching the movie, and that he called the theater later to get information and the manager “referred to [him] as that ‘Black Guy’ that was here earlier when he was speaking to the other staff about me.” Id. 6. The Motion also attaches a Notice of Receipt of Complaint from the FCHR dated April 21, 2020 (the “Notice”). [ECF No. 37 at page 3 of 3]. According to the Notice, the FCHR received the Complaint and “will make every attempt to investigate your claim within 180 days.” 00608837.DOCX 6 3 Case 20-14695-LMI Doc 307 Filed 06/22/20 Page 4 of 22 The Notice “invites [Mr. Williams] to participate in a Mediation Conference in an effort to expeditiously and amicably resolve this dispute.” The Notice further states “If you wish to participate in FCHR’s mediation process, please complete, sign, date and return all of the enclosed forms to [FCHR] within twenty-five (25) days of the date of this letter.” The Motion does not say whether Mr. Williams submitted the enclosed forms before the Petition Date to seek mediation. The Debtors have not sought mediation with the FCHR. 9. The Proof of Claim asserts damages of $1,000,000.00 and alleges a set of facts similar to those found in the Complaint. Memorandum of Law A. Purpose of the Automatic Stay The primary purpose of bankruptcy law is to provide an honest debtor with a fresh start by relieving the burden of indebtedness. In re Vega, 503 B.R. 144 (Bankr. M.D. Fla. 2013) judgment entered, 6:10-BK-06873-KSJ, 2013 WL 6180988 (Bankr. M.D. Fla. 2013). As such, Congress enacted § 362(a) and its subsections “to give debtors ‘breathing room’ after filing their petition.” See In re Feingold, 730 F.3d 1268, 1276 (11th Cir. 2013) cert. denied, 134 S. Ct. 1880 (U.S. 2014) (citing In re Patterson, 967 F.2d 505, 512 n. 9 (11th Cir.1992)). The automatic stay is “one of the fundamental debtor protections provided by the bankruptcy laws,” that “permits the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.” Id. B. Standard for Relief from Stay Relief from the automatic stay may be granted under appropriate circumstances, for cause. See 11 U.S.C. § 362(d)(1). “Courts conduct a case-by-case inquiry and apply a totality of the circumstances test to determine whether cause for relief from the stay exists.” In re Laminate 00608837.DOCX 6 4 Case 20-14695-LMI Doc 307 Filed 06/22/20 Page 5 of 22 Kingdom, LLC, 2008 WL 1766637 at *3 (Bankr. S.D. Fla. 2008). The decision to lift the stay is within the discretion of the Court. In re Dixie Broad., Inc., 871 F.2d 1023, 1026 (11th Cir. 1989). Regardless, initially, the moving party must first establish a prima facie showing that “cause” exists to lift the stay. See In re Paxson Elec. Co, 242 B.R. 67 (Bankr. M.D. Fla. 1999) (citing In re Cummings, 221 B.R. 814, 819 (Bankr. N.D. Ala. 1998)); In re Jim's Maint. & Sons Inc., 418 Fed. Appx. 726, 728 (10th Cir. 2011). There is no set list of circumstances that a bankruptcy court is required to consider in evaluating whether § 362(d)(1) “cause” exists to lift the automatic stay. In re Feingold, 730 F.3d 1268, 1277 (11th Cir. 2013) cert. denied, 134 S. Ct. 1880 (U.S. 2014). Rather, courts evaluating whether to grant stay relief have looked to a variety of case-specific factors, including (1) whether the debtor has acted in bad faith; (2) the “hardships imposed on the parties with an eye towards the overall goals of the Bankruptcy Code”; and (3) pending state court proceedings. Id. (internal citations omitted). See also In re Brown, 311 B.R. 409, 412–13 (E.D. Pa. 2004) (“A court may consider the policies reflected in the bankruptcy code, and the interests of the debtor, other creditors and any other interested parties. Unsecured creditors are generally entitled to relief from an automatic stay only in extraordinary circumstances.”). C. Mr. Williams Cannot Meet His Burden In the instant case, Mr. Williams has failed to establish that “cause” exists to lift the stay. In making such a determination, the Court should consider factors such as: (1) trial readiness of proceeding in non-bankruptcy forum; (2) judicial economy; (3) necessity of resolving preliminary bankruptcy issues; (4) costs of defense or other potential burden to debtor or estate; (5) creditor's chances of success on the merits; (6) specialized expertise of non-bankruptcy forum; (7) whether damages or claim that could result from non-bankruptcy proceeding might be subject to equitable subordination; 00608837.DOCX 6 5 Case 20-14695-LMI Doc 307 Filed 06/22/20 Page 6 of 22 (8) extent to which trial of case in non-bankruptcy forum would interfere with progress of bankruptcy case; (9) anticipated impact on movant, or other non-debtors, if stay was not lifted; and, (10) presence of third parties over which bankruptcy court lacked jurisdiction.