The secretive hedge fund owners of Cineworld could seize control of film projectors and even theatre seating in an attempt to strong-arm UK landlords into accepting steep cuts to rent.

The cinema chain is awaiting a crunch High Court verdict this week on whether it can begin negotiations over a radical restructuring of its UK business.

A clutch of local councils are among cinema owners facing heavy losses on taxpayer investments if the chain can impose new terms on its landlords.

Cineworld, which operates across 128 sites in the UK and Ireland and employs 4,400 people, struck a deal with lenders last year to swap billions of pounds of debt for shares in the business. The names of the new shareholders have been closely guarded and are not even known by some advisers inside the deal.

Cineworld announced in July that six of its sites would close after failing to find a buyer. It now says it cannot afford to pay its rent and wants to restructure its leases. Failure to do so will render the UK business insolvent, the company claims.

Its US parent emerged from bankruptcy protection last year and has since “provided the group with liquidity and headroom in relation to its financial indebtedness”, court filings reveal.

“However, while it allowed the US group to terminate or amend non-viable leases in its portfolio, it did not address the UK group’s lease liabilities.”

Cineworld blamed the scriptwriters’ and actors’ strikes in 2023 for limiting new film releases, “resulting [in a] smaller attendance base at the UK group’s cinemas”. One of the few bright spots this year is the Marvel movie Deadpool & Wolverine, which has made £43.7 million at the UK and Irish box office so far, according to Screen Daily, the film news site

The company’s UK operations have become dependent on funding from the US to pay landlords, many of which own properties that are “over rented”, it said.

Under proposals to be put before a judge on Wednesday, six of Cineworld’s multiplexes would move to a “zero rent” agreement. A further ten would switch to turnover rents, receiving about 50p for every ticket sold. And rents at 33 other sites would be cut to “market levels” as deemed by Cineworld’s own advisers.

Landlords are complaining that the proposed terms are actually below market rates and would allow the company’s hedge fund owners to benefit from a surge in profitability as a host of new releases, such as Paddington in Peru and Captain America: Brave New World, come out in early 2025.

The restructuring is being proposed under a comparatively new arrangement in which at least three-quarters of just one class of creditors can agree to the deal and “cram down” other classes. Cineworld has split its creditors into more than 30 different classes.

The last resort for landlords would typically be to take back their properties instead of agreeing to a restructuring. But Cineworld has the right to remove fixtures and fittings — including projectors, audio systems and seating — before they do so, making it difficult for landlords to quickly install their own operators to run the cinemas on their behalf.

A spokeswoman for Cineworld said: “In the event that a landlord chooses to take their property back, Cineworld will, of course, remove its own furniture, fittings and equipment.”

Many of the landlords are traditional property investors such as Land Securities and British Land, but several sites have been built with taxpayers’ money to deliver a return on investment for local authorities.

Among those council landlords set to have their rent cut under Cineworld’s restructuring proposals are Barnsley, South Oxfordshire, Monmouthshire, Huntingdonshire, Wakefield, Warrington, Derbyshire, West Suffolk, and Hinckley & Bosworth in Leicestershire.

The legal hearing this week is the first step in the restructuring process. Talks with each group of landlords will follow before a creditor vote in September.

Cineworld has pledged to invest £35 million in the business if landlords agree to the rent cuts, though sources close to the landlords pointed out that this would be only after property owners had forfeited tens of millions of pounds as a result of the restructuring.