Cineworld, the globe’s second-largest exhibitor and owner of Regal Cinemas, is preparing to file for bankruptcy within weeks, according to reports in The Wall Street Journal.
The London-based company has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process, the publication reported. Cineworld, which operates 751 sites in 10 countries including the boutique Picturehouse chain in the UK, is expected to file a Chapter 11 petition in the United States and is considering filing for insolvency in the UK, the report said.
Cineworld’s share price dropped more than 50% on news of the potential bankruptcy.
The news comes days after the company said it was in “active discussions with various stakeholders and is evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction.”
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The company cited lower-than-expected admission rates due to a lack of blockbuster films for the slump in business.
“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,” the company said. “These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the Group’s liquidity position in the near term.”
Responding to reports, Philippa Childs, Head of BECTU, said: “This is very worrying news, not least for the UK’s Cineworld and Picturehouse workforce who have already been through a tumultuous time during the pandemic. The UK’s cinema industry suffered an incredible blow due to Covid-19 and this latest news will be very unsettling for cinema workers.
The statement continued: “We will do everything we can to support our members during this challenging time and will be looking to Cineworld to mitigate the impact of any bankruptcy arrangements on its employees.”
Exhibition has been one of the hardest hit sectors of the industry as COVID forced closures of cinemas across an agonizingly volatile and lengthy period for bosses, workers and audiences. Cineworld is not alone in assessing its future. Vue International is being restructured and AMC has been manoeuvring to lessen survival risk.
In March, Cineworld reported 2021 revenues of $1.805 billion. Operating profit also rebounded, reaching $15.8 million, up from a 2020 loss of $2.258 billion. The group overall recorded a $708.3 million pre-tax loss across the Covid-impacted year in which cinemas were closed for most of the first half.
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