By Mary Hladky and Jane Smith
Less than three months after filing for Chapter 11 bankruptcy protection, iPic Entertainment has emerged from the legal process in the arms of its largest creditor.
Delaware U.S. Bankruptcy Judge Laurie Selber Silverstein on Oct. 28 approved the sale of iPic’s assets for $51.8 million to an affiliate of the Retirement Systems of Alabama, which has loaned iPic about $220 million, Law360 reported. The sale is to close this month.
The affiliate, iPic Theaters, was the top bidder for the luxury theater chain’s assets at an Oct. 17 bankruptcy auction.
It beat out a competing $48.8 million bid by Cinemex Holdings USA, a subsidiary of Mexican movie theater operator Cinemex, which opened its first U.S. theater in Miami in 2016.
IPic’s 16 theaters, including in Delray Beach and Boca Raton, are expected to continue operating for now, but the long-term picture is less clear.
IPic attorney Jeffrey Pomerantz said RSA will keep open at least eight of the chain’s theaters and could continue developing six more sites, according to the Law360 Oct. 28 report. Those sites include planned theaters in Fort Lauderdale and Sunrise, according to filings in the case.
But the chain’s headquarters will not move to Delray Beach as long promised. RSA wants to keep it in Boca Raton, where it has been located since iPic was launched in 2010.
That is a blow to Delray Beach city leaders, who had conditioned approval of the construction of a downtown iPic on the headquarters move, and to the city’s business leaders, who wanted to score another corporate headquarters for the city.
An RSA spokeswoman declined comment. Two publicists for iPic founder and CEO Hamid Hashemi did not respond to emails.
The Delray Beach iPic opened in March after six years of wrangling with the city.
One week after iPic Entertainment filed for bankruptcy protection on Aug. 5, Hashemi lamented the time it took to complete negotiations with the city and build the theater, causing cost increases.
The theater project, now known as 4th and 5th Delray, includes office space, retail and a parking garage just south of Atlantic Avenue between Southeast Fourth and Fifth avenues.
IPic paid $3.6 million for 1.6 acres in April 2017. A few weeks earlier, a new entity called Delray Beach 4th and 5th Avenue paid $2.3 million for .14 acres to provide a loading zone.
The same day the 1.6-acre sale closed, Hashemi’s Delray Beach Holdings sold the land to Delray Beach 4th and 5th Avenue.
That entity has a joint venture partner in Boston and an investor partner in Los Angeles. Hashemi retained a small stake.
In contrast, the construction of a theater and adjacent Tanzy Restaurant in Boca Raton’s Mizner Park in 2012 generated no controversy. IPic’s headquarters also is in Mizner Park.
IPic offered a new concept: luxury theaters with reclining seats, quality food and drinks brought to patrons, and pillows and blankets.
The chain planned to grow to 25 theaters in the U.S. and to expand to Saudi Arabia. Its third Florida theater is in North Miami Beach.
But since iPic was formed, theater-going has decreased as people opt to stream movies at home. At the same time, larger chains copied iPic’s dine-in option and reclining seats.
IPic’s revenues declined in the first quarter of this year. On July 1 it missed a $10.1 million interest payment due to RSA.
Shortly after it sought bankruptcy protection, its stock was delisted on Nasdaq and traded over the counter at about 40 cents per share.
In recent documents in the bankruptcy case, landlord Delray Beach 4th and 5th Avenue said it is owed about $135,947 on its theater lease.
IPic’s Boca Raton landlord, Brookfield National Properties, said it is owed $79,907.
IPic disputed those amounts. A bankruptcy court hearing is set for Nov. 13 to resolve these and other remaining disputes.
Brookfield also objected to RSA’s assumption of the lease and asked for more information about its experience with theaters and restaurants and its financial health.
But in her order, Judge Silverstein said RSA had provided adequate assurance that it could operate the theaters.