Cineworld files for bankruptcy in US as theater audiences stay at home
The world’s second-largest cinema chain is battling to remain solvent in the United States after filing for Chapter 11 bankruptcy protection – a move that will allow it to restructure in an attempt to balance the books.
Cineworld hopes to exit bankruptcy proceedings by the first quarter of 2023
Cineworld was dealt a body blow by repeated lockdowns, with audience numbers yet to fully recover. This precarious situation has been exacerbated by a $5bn debt mountain associated with its ill-timed takeover of Regal Cinemas, placing the chain in a perilous financial position.
The big-screen Goliath straddles the world with over 751 theaters to its name, including 500 in the US, together with a significant presence in Europe and Israel.
Acknowledging the move in a press statement, Cineworld vowed to use the breathing space afforded by Chapter 11 bankruptcy protection to negotiate with creditors and bring down its debt.
Outlining its next steps, the group said it “will seek to implement a deleveraging transaction that will significantly reduce the group’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate, and capitalize on, Cineworld’s strategy in the cinema industry.”
If all goes according to plan, Cineworld hopes to exit bankruptcy proceedings by the first quarter of 2023, counting on $1.94bn of financing from its lenders to tide it over.
Cineworld’s bid to spread the pain spells bad news for shareholders, who can expect the value of their holdings to be slashed. For advertisers, it appears to be business as usual, with Havas Media UK backing cinema as a “critical fame channel.”