New Cineworld court documents reveal that it may not remain in business long enough to make it out of Chapter 11 bankruptcy protection.
Cineworld filed for Chapter 11 bankruptcy protection last year, and looked set to exit after agreeing a deal with its creditors. As announced last week, that agreement allowed creditors to take full control of the business with shareholders getting wiped out.
This set a path for the cinema chain to exit bankruptcy proceedings, which it said it hoped to do in the first half of this year.
Documents filed by Cineworld today in a Texas bankruptcy court, though, revealed that Cineworld could not guarantee that it could stay alive until the plan is complete and it can exit Chapter 11.
The documents noted that Cineworld and its subsidiaries “face uncertainty regarding the adequacy of their liquidity and capital resources”, which is intensified by the fact that they operate in a “capital-intensive industry”, while also racking up legal fees related to the bankruptcy proceedings.
Cineworld went on to say that if its cash flow remains at the current depressed levels, it would be difficult to take any action that would lead to improvement. It said it was therefore a possibiity that its cash flow may not be sufficient to fund its operations until it can emerge from bankruptcy protection.
The company - which also owns Picturehouse and has 24 London sites - could not provide assurance that further funding would be available to keep the company alive if that happens.
“The Debtors’ access to additional financing is, and for the foreseeable future likely will continue to be, extremely limited if it is available at all,” it said.
Cineworld still expects to be able to exit Chapter 11 in the first half of this year though, and said that it is working to confirm the rescue plan “on an expeditious timeline”. However, it noted that a sale of its operations outside of the US, UK and Ireland could potentially push the exit date back.
Until then, it will continue to operate its business as usual.
The collapse of Cineworld came after the Covid-19 pandemic left its venues closed for much of 2020 and 2021, and the impact of the pandemic slowed the release calendar for blockbusters after reopening.
It said it was looking to sell itself at the start of this year and rival Vue reportedly made a bid for its assets.
