Recently, a New York State Supreme Court judge announced an auction date of November 8 for the properties owned by Charles Cohen’s Cohen Realty Enterprises. This includes the U.S. Landmark and UK Curzon arthouse cinema chains that he acquired in 2018 and 2019. The reason behind this auction is the lawsuit filed by Fortress Credit Corp. against Cohen for defaulting on a significant loan backed by Landmark and other assets.
The impending closure of Landmark cinemas could have a negative impact on the already struggling indie film business, which is still recovering from the effects of the Covid-19 pandemic. The chain has already lost leases and closed multiple locations, including the crucial Westside Los Angeles theater, as well as theaters in San Francisco, Seattle, and Denver. Independent distributors are concerned about the potential loss of these theaters, as some of them still perform well in certain markets.
The properties owned by Cohen, which serve as collateral on loans from Fortress totaling $534 million, are now facing the possibility of being auctioned off. If the auction proceeds as planned, it would mark one of the largest Uniform Commercial Code (UCC) claims in New York real estate history. It is uncommon for a single large loan to be secured by a group of real estate assets, according to a person familiar with the case.
Despite initial denials of any financial jeopardy by a representative for Charles Cohen, the auction date has been set by the judge after denying Fortress’s first petition and subsequent re-submission. There have been attempts to reach an agreement on restructuring the loan, but it seems unlikely to happen. While the auction is scheduled for November, there is still a possibility for last-minute negotiations or changes.
In the midst of these financial troubles, there have been some interesting developments in the exhibition industry. Sony’s recent acquisition of Alamo Drafthouse and the interest shown by bigger chains like AMC and Cinemark in strategic theater leases indicate a shifting landscape in the industry. While some chains are actively expanding their presence, others like Landmark are facing uncertain futures.