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Burnaby entertainment centre secretly eyed in sell-off, blockbuster lawsuit trial hears

Rec Room mentioned in court as part of lawsuit case
rec room -TRR-The-Yard-web
The Rec Room entertainment centre in B.C. at the Amazing Brentwood.

It was only few months ago that the Rec Room entertainment centre opened in Burnaby at the Amazing Brentwood.

But a blockbuster lawsuit trial heard some startling news that the Burnaby Rec Room could have been part of a massive sell-off if a buyer of Cineplex had had its way.

Cineworld Group PLC's chief executive was planning to sell off Cineplex Inc.'s RecRoom and signage business in a secret initiative he called "Project Jumanji." The Burnaby Rec Room was set to open in spring/summer 2020, but construction was delayed by the COVID-19 pandemic.

The U.K. cinema chain's head Moshe "Mooky" Greidinger testified today (Wednesday) at the Ontario Superior Court of Justice that his company was planning to find buyers for the businesses.

Greidinger was planning for the sale as he worked to close a $2.8-billion deal Cineworld signed in December 2019 to acquire Cineplex.

He says he wanted to rid Cineplex of the businesses because Cineworld's focus was primarily on theatres and it didn't have the expertise to keep other ventures open.

Greidinger and Cineworld worked to sell the businesses before June 2020, when they backed out of the takeover deal and blamed Cineplex for breaching its terms.

Cineplex has focused on arcade and dining venues called RecRoom as well as a digital sign business to offset swings in the box office and increased streaming options.

Cineplex Inc. says a U.K. theatre giant acted in bad faith by delaying a takeover deal of the Canadian company and hoping it would default during the pandemic, a judge heard at the opening of its trial against Cineworld Group PLC recently.

Toronto-based Cineplex is seeking to recoup $2.18 billion in damages from Cineworld after the company walked away from the December 2019 deal amid a strict COVID-19 lockdown in June 2020.

"Cineplex did what all other affected businesses, including Cineworld and its other peers, did," Alan Mark, a lawyer representing Cineplex, said in opening remarks Monday in the case being heard by the Ontario Superior Court of Justice.

"These actions were consistent with Cineplex's obligations under the arrangement agreement to preserve the value of its business during the interim period."

Cineworld is arguing it had the right to terminate the agreement without payment because Cineplex strayed from "ordinary course," when it deferred its accounts payable by at least 60 days, reduced spending to the "bare minimum" and stopped paying landlords, movie studios, film distributors and suppliers at the start of the pandemic.

The trial is expected to be a test case for pandemic-era litigation as the two companies argue about each other's actions during the pandemic that led to plummeting revenues and changed the cinema landscape.

  • With additional reporting by the Canadian Press