It is widely accepted that speech intelligibility improves as a speech signal and interfering masker are separated spatially in azimuth. In a previous study [Westermann et al. (2012), IHCON] a similarly strong improvement was found for normal hearing (NH) listeners when target and masker are separated in distance. In this study speech reception thresholds (SRTs) were measured for 16 hearing impaired (HI) listeners using the Listening in Spatialized Noise - Sentences Test (LiSN-S) and the Coordinate Response Measure (CRM). Acoustic scenarios were auralized via headphones using binaural room impulse responses recorded in an auditorium. In the first scenario the target was presented at a distance of 0.5 m from the center of the listeners head and the interferer at a distance of 0.5 m or 10 m. In a second setup the interferer's location was fixed and the target's location was varied. HI listeners showed a substantial release from masking as target and interferer were separated in distance. This effect was consistent for both LiSN-S and CRM, but less pronounced than for NH listeners. This study suggests that distance related cues play a significant role when listening in complex environments and are also to some extent available to HI listeners.