CJ CGV’s U.S. unit is facing a CGV USA lawsuit over a $10.7 million success fee. The dispute comes after the company shut down its San Francisco theater just 18 months after opening.
The 14-screen multiplex launched in 2021 but closed in early 2023. According to Variety, CGV USA reported a $54 million loss tied to the closure. The company is now being sued by the law firm it hired to help manage the shutdown.
Law firm says it secured lease exit
To avoid a $75.2 million lease guarantee, CGV USA brought in Pachulski Stang Ziehl & Jones, a bankruptcy law firm. The firm negotiated a $28 million sale of the property to the landlord.
It now claims the deal qualifies for a $10.7 million success fee. However, CGV USA rejected the demand. The company says it lost money on the sale and closed the deal independently after the law firm’s involvement ended.
Arbitrator sides with firm in CGV USA lawsuit
The case moved to arbitration. In February, arbitrator Bruce Isaacs ruled that CGV USA must pay the fee. He said the firm helped create an opportunity to cut losses or generate profit.
The law firm has asked a court to confirm the decision. Meanwhile, CGV USA is challenging the ruling. It argues the arbitration outcome is flawed and should be overturned.
CJ CGV disputes law firm’s role
In an April 1 statement, CJ CGV Korea said the total loss from the closure stands at $42 million, excluding the disputed fee. The company said CGV USA pursued a third-party building purchase to avoid long-term rent payments.
It added that the law firm’s role ended before the final transaction. Therefore, it says the success fee is not owed.
The CGV USA lawsuit comes as the company faces broader struggles. CGV recently marked its Buena Park location as “temporarily closed.” Only the Los Angeles theater remains open.
CJ CGV entered the U.S. market in 2010. However, it has since been hit by falling box office revenues. In February, the company closed four theaters in Korea and offered early retirement to staff.
BY HYEONGJAE KIM [kim.hyeongjae@koreadaily.com]
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