Cineworld on verge of collapse after filing for bankruptcy in US
Cineworld has filed for bankruptcy in the US as it seeks time to restructure the business, bosses said today.
The world’s second largest cinema chain said it had filed for Chapter 11 – a form of US bankruptcy that businesses often use when they plan to bounce back from their current problems.
There had been reports of problems at the debt-laden company for some time, with speculation it could file for bankruptcy back in April.
The chain has over 751 sites – including 127 in the UK – with 9,000 screens in 10 countries.
It also owns the Picturehouse chain of cinemas in the UK and the Regal chain in the US.
But profits plummeted during the Covid-19 pandemic, when cinemas had to close during lockdowns and many people were put off going in any case due to the possibility of catching the virus.
The company’s market value has more than halved and it faces debt of more than £4 billion.
It plans to emerge from bankruptcy in the first quarter of next year and said it is ‘confident that a comprehensive financial restructuring is in the best interests of the group and its stakeholders, taken as a whole, in the long term.’
Current shareholders in the business are likely to see their existing positions diluted significantly, Cineworld said.
But its shares are expected to continue trading on the London Stock Exchange.
The business said it would use the restructuring to talk to its landlords in the US and negotiate for better lease terms.
Last month, Cineworld 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.’
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