Cineworld Group Plc, the owner of Cineworld cinemas in the UK and Regal Cinemas in the US, is reportedly preparing to file for bankruptcy within weeks after struggling to rebuild attendance from pandemic lows.
The British cinema company has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process, an inside source told the Wall Street Journal.
It comes after Cineworld announced on Wednesday (August 17) that performance since April 2021 was 'below expectations'.
The company has 127 branches in the UK alone, meaning thousands of jobs could be at risk.
Cineworld currently operates in the UK, Ireland, Poland, the Czech Republic, Slovakia, Hungary, Bulgaria, Romania, Israel and the US, employing 28,000 people in total.
The chain had to be rescued by investors during the coronavirus pandemic when all its branches had to close. They placed 5,500 staff on furlough and carried out both voluntary and compulsory redundancies.
The owners of Cineworld, Cineworld Group Plc, are understood to be considering filing for bankruptcy in the UK
In January 2021 bosses faced a backlash from shareholders over a scheme which could have awarded senior leaders with up to £208million in share awards.
Its chief executive could receive £65million alone after investors holding just over 70 per cent of shares voted for the new long-term incentive plan.
Cineworld is expected to file a chapter 11 petition in the U.S. and is considering filing an insolvency proceeding in the U.K., they added.
The pandemic saw cinemas closed across the world during the pandemic due to the risk of the spread of coronavirus.
Some cinema companies were already struggling to retain audience numbers due to highly competitive online screening services.
It seems the reopening of cinemas has not helped improve visitor numbers, leading to major chains such as Cineworld coming under increasing financial pressure.
The British company only narrowly avoided bankruptcy in 2020 after last-minute support from creditors while its 800 branches were closed due to covid.
In a statement on the group's website on Wednesday, the cinema owner said that recent audience figures were below its expectations, and it expected the company to suffer significant 'dilution of equity interests' in the near future: 'Despite a gradual recovery of demand since re-opening 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.'
The statement continued: 'In connection with these initiatives, the Group remains in active discussions with various stakeholders and is evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction.
'Any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld.'
This story is being updated.
English (United States) ·