Former Cathay cinema operator mm2 gets lifeline after High Court shields it from creditors for 4 months

Former Cathay Cineplexes operator mm2 Asia has been given a lifeline after the High Court on Dec 10 allowed the company to be shielded from creditors and legal proceedings for four months while it works out a restructuring plan.

The move will allow the company time and breathing space to work out a plan to repay its creditors, said Judicial Commissioner Mohamed Faizal in a written judgment after a hearing.

On Nov 10, mm2 said in a bourse filing that it had applied to the High Court for a moratorium under the Insolvency, Restructuring and Dissolution Act to stop current, pending or threatened proceedings from being commenced or continued against it.

The application was made after the company and its subsidiaries received repayment demands from several creditors, including UOB, for $74.6 million; Frasers Centrepoint Trust for $2.6 million; and Standard Chartered for $905,000.

The application was heard on Dec 10 and the High Court granted mm2’s application.

At the hearing, more details of the company’s debt emerged.

Other than UOB, Frasers and StanChart, the group owes Linkwasha Holdings more than $7.55 million in principal and accrued interest in July 2025 for a $30 million loan it took in 2017 to partially finance the acquisition of Cathay Cineplexes.

The group also owes Alprop about $794,000 and it faces impending defaults on bonds totalling over $63 million.

The debt that mm2 faced “resulted in an untenable situation where it faces imminent winding-up proceedings if it is not provided the breathing space that is provided by a moratorium”, said the judge.

In its court application, mm2 said it intends to distribute $12 million among its creditors after restructuring, translating to the creditors receiving about 28 cents for every dollar of outstanding debt. If it had been liquidated, mm2 said the creditors may receive nothing, or at most 2.55 cents on the dollar.

The $12 million to be paid to creditors will come from a larger proposed $25 million investment from white knight Hildrics Asia Growth Fund VCC.

At the court hearing, mm2’s restructuring plan was opposed by Linkwasha, which argued in written submissions that mm2 had not provided sufficient details for the court to assess the reasonable prospects of its restructuring plan. The creditor also wanted a shorter moratorium and strict conditions of mm2 providing information on its restructuring progress.

Other than Linkwasha, other creditors supported mm2’s restructuring plan, a point which the judge noted.

“Even at this rather early stage, it would seem that creditors comprising over half of the unsecured debt have come out to explicitly support the request for a moratorium. Just as significantly, a fair number of these creditors have provided their support very recently, only after the application had been filed,” Judicial Commissioner Faizal said, granting the lifeline.

“Such momentum, in some senses, represents a bellwether of viability and hints at the promise of a workable, collectively acceptable solution..."

“(The) only creditor opposing the application at present is the opposing creditor (Linkwasha), and the amount owed to it pales in comparison to the quantum owed to the creditors who have stated their support for a moratorium.”

On Linkwasha’s request for the court to order mm2 to provide fortnightly updates of its discussions with its white knight, the judge said that any proposal for periodic updates must also be tempered by commercial reality.

The company will need to devote its “somewhat finite bandwidth” to restructuring in the coming weeks, and it may be imprudent to expect the company to concurrently expend disproportionate energy on micromanaging the flow of interim communications, said the judge.

“Transparency is important, but so too is focus,” he said. “One might perhaps liken it to a surgeon attempting to provide running commentaries to the patient’s family during a life-saving operation, and shuttling back and forth between the operating theatre and the family room.

“The effort spent narrating each step to the next of kin may potentially assuage the family and be very much appreciated by them, but such an attempt to overly split one’s concentration can, if one is not careful, come at the cost of detracting from the very precision that is required to achieve a potentially successful outcome for the critically ill patient.”

Instead, the court ordered that mm2 update creditors monthly on its negotiations with the white knight Hildrics, providing them and the court with periodic financial reports as well as fleshed-out details of the restructuring proposal by Feb 27, 2026. The company also has to disclose significant asset transactions within 14 days.

Despite granting mm2 a lifeline, the judge said the group should not have argued for judicial intervention by trying to tug at the emotional heartstrings of the court.

“Some parts of its affidavits and submissions appeared engineered to paint an especially romanticised picture of the purported significance of (mm2) and its founder in the broader media landscape in Singapore,” the judge said. He noted examples such as describing mm2 as a “labour of love” with the mission of “bringing entertainment to the Singapore scene and showcasing Singapore talent”.

mm2 also claimed its movies were “produced/directed/written by Singaporeans… and featured Singapore actors”, that some of its movies touch on subjects “close to many Singaporeans’ hearts”, and that it seeks to “preserve Singapore’s history and promote Singapore as a media hub”.

Judicial Commissioner Faizal said: “One cannot help but come to the conclusion that part of the motivations for such statements is to impress on the court the social value of (mm2) and, indirectly, to underscore the point that it cannot afford to be liquidated.”

He noted that such an approach has no place in legal analysis: “The question of whether a moratorium ought to be granted… does not, and cannot, turn on romanticised notions of a company’s perceived social value.

“The court is not, and should not be, in the business of picking winners and losers in the commercial world, nor can it assume the role of arbiter of which enterprises are ‘worthy’ of preservation or otherwise, by virtue of its perceived significance in the domestic commercial ecosystem.”

Source: The Straits Times © SPH Media Limited. Permission required for reproduction.

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