Cineworld Group is allegedly preparing to file for bankruptcy after struggling to rebuild from the pandemic, according to a Wall Street Journal report.
The entertainment giant is the world's second-largest cinema chain and owns locations across 10 countries including the UK and the United States. According to the report, Cineworld has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to receive advice on the bankruptcy process. The move could put as many as 102 cinemas located in the UK at risk of closure.
It comes just days after Cineworld warned that a lack of big-budget movies was generating a negative impact on admission levels and would likely continue to cause issues until November. Today's report suggests that the company is expected to file a chapter 11 petition in the United States and is considering filing an insolvency proceeding in the UK.
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A few days ago, Cineworld stated that it was in "active discussions with various stakeholders" to establish a strategy to help reduce debt. The chain also warned at the time that "any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld".
On Wednesday (August 17), the entertainment chain's market value plummeted to just over £100m compared to its pre-pandemic value of £4.4bn. Cineworld operates 751 sites with 9,000 screens across the world which includes the Cineworld and Picturehouse screens in the UK and Ireland.
The chain previously said: "Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations. These lower levels 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.”
Cineworld and Kirkland & Ellis LLP have not yet provided a statement on the reports. The Manchester Evening News has contacted Cineworld for a comment.
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