Cineworld has confirmed it is considering whether to put the world’s second largest cinema chain into bankruptcy as it struggles with almost $5 billion of debt.
Bosses at the cinema chain confirmed on Monday they are considering options for restructuring the business, which may lead to a Chapter 11 bankruptcy filing in the US. Chapter 11 is often referred to as reorganisation bankruptcy and does not mean the company is destined to close.
Firms including General Motors and Marvel Entertainment have previously made Chapter 11 filings, only to bounce back later. Cineworld was struggling with $4.8 billion (£4 billion) of debt at the end of the last financial year.
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Its announcement came days after the Wall Street Journal first reported the company was on the verge of declaring it is bankrupt. In a statement to shareholders, it said: “Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and members.
"The strategic options through which Cineworld may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process. Cineworld is in discussions with many of its major stakeholders, including its secured lenders and their legal and financial advisers.”
Importantly, the company’s cinemas would be able to continue to trade throughout the whole process. This brings some respite for workers at the 127 cinemas that Cineworld runs in the UK, which include the Picturehouse chain.
Globally the cinema giant employs around 28,000 people across 10 countries. It said: “Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees.”
The last couple of years have been tough for anyone in the cinema business. Despite recent blockbuster releases such as Top Gun: Maverick, The Batman and Thor: Love And Thunder, the sector has never fully recovered from the Covid pandemic.
Last week, Cineworld told investors that, while demand has recovered a little, customer numbers have been lower than expected. It 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.”
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