Cineworld Group PLC is preparing to file for bankruptcy amid financial troubles, according to the Wall Street Journal.
The cinema chain, which has branches in Newcastle city centre, Boldon in South Tyneside and Dalton Park in County Durham, this week warned that audience numbers have been weaker than anticipated, and predict that figures will remain low until November amid 'limited' film releases.
The world's second largest cinema business - trailing 211 sites behind AMC - revealed earlier this week that it was 'assessing options to shore up its finances'.
Read more: North East International Film Festival announces autumn return
Wales Online reports that Cineworld has allegedly engaged with Kirkland and Ellis lawyers, as well as consultants from Alix Partners to advise on bankruptcy proceedings. The WSJ say that the group is looking towards Chapter 11 bankruptcy in the USA, as well as complete insolvency in the United Kindgom.
The group, which also owns the popular Picturehouse chain in the UK, as well as Regal Cinemas in the United States, has pinned hopes on releases like Top Gun: Maverick, and The Batman and Thor: Love And Thunder to assist in its financial recovery following the global impact of the coronavirus pandemic. However, in a statement, the firm said: "Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations.
“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.”
Cineworld has announced that it will continue implementing cost-saving plans, but will also look at new avenues to help improve on financial troubles. The well-established business was saddled with $4.8bn(£4bn worth of debt by the end of the last financial year, and said that it was in talks with stakeholders over potential funding as well as restructuring with regards to its balance sheet.
Liberum analyst, James Wheatcroft, admitted that the heavy debt burden means that the latter will 'likely leave little for existing Cineworld shareholders'. In response, Cineworld said: “The group’s business operations are expected to remain unaffected by these efforts and Cineworld expects to continue to meet its ongoing business counterparty obligations.
“Cineworld continues to welcome guests to its cinemas across its global markets as normal, without disruption.”
This comes following the business publicly posting a loss of $565.8m (£429m) in 2021 - as revenues were boosted by higher admissions. Sentiment around the company has also seen dents over the past year, after a pair of separate legal spats. In September, the London-listed business struck an agreement to pay $170m to upset Regal shareholders who were disgruntled with the price it purchased the US cinema chain for. Although this has subsequently sought to delay some payments.
Meanwhile, in December, Cineworld was ordered to pay 1.23bn Canadian dollars (£720m) following a court case, after it decided to pull out of a takeover of Canadian rival Cineplex while the pandemic broke out.
Chief executive Mooky Greidinger appealed against the court ruling and claimed the company acted in 'good faith'.
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