Bosses at Cineworld are mulling whether to put the world’s second-largest cinema chain into bankruptcy.
In an update to shareholders on Monday (August 22) senior leaders at the firm said they were looking at options for restructuring the business, which is struggling under heavy debts.
Directors said one option they are considering is a potential Chapter 11 bankruptcy filing in the US. Chapter 11 is often referred to as reorganisation bankruptcy and does not mean the end for the company.
Firms including General Motors and Marvel Entertainment have in the past made Chapter 11 filings, only to bounce back later.
The announcement from Cineworld came days after the Wall Street Journal first reported that the company was on the verge of declaring it is bankrupt which sent shares plummeting.
In the announcement released on Monday, the company 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.
It 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.
“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," a statement by the company said.
But it added that shareholders were likely to see their holdings in the cinema chain watered down as a result of the filing.
It has been a tough couple of years for anyone in the cinema business, despite recent blockbuster releases such as Top Gun: Maverick , The Batman and Thor: Love And Thunder .
Last week, Cineworld told investors that while demand has recovered a little following the pandemic, audience numbers had been weaker than expected, and were predicted to stay low until November, due to “limited” upcoming film releases.
The company posted a narrowed loss of £429m in 2021, compared to a £2.2bn loss in 2020, as revenues were boosted by higher admissions following the re-opening of theatres after Covid-19 lockdowns.
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