Cinema chain on brink of collapse
THE cinema industry was plunged into chaos last night amid fears Cineworld is just weeks away from filing for bankruptcy.
A household name, Cineworld – which has 127 branches in the Uk and is the world’s second-largest cinema chain – is teetering on the brink and struggling under a mountain of debt.
The chain, which also owns Picturehouse in the Uk, had hoped to bounce back this year with films such as James Cameron’s Avatar 2, Tom Cruise’s Top Gun: Maverick, The Batman and Thor. But Hollywood has released fewer movies than a typical summer, largely due to filming disruptions during the pandemic.
Shares in the London-listed company at one point crashed by 81 per cent to a record low of 1.8 pence yesterday after the Wall Street Journal warned it is expected to file for bankruptcy in the US and is also considering insolvency proceedings in the Uk.
Shares later recovered but still closed down 58pc at 4.1p. The firm has hired lawyers from kirkland & Ellis and consultants from AlixPartners to advise on the bankruptcy process. On
‘Never fully recovered from the pandemic’
Wednesday Cineworld told the London Stock Exchange: ‘Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations. These is due to a limited film slate that is anticipated to continue until November 2022.’
The industry took a pounding during Covid and has never fully recovered. At the height of the pandemic, Cineworld shut its Uk cinemas and placed 5,500 workers on furlough.
The company is struggling under a mountain of debt – £4billion at the end of the last year. It is also suffering from a string of botched takeovers and must pay hundreds of millions in damages linked to past acquisition deals.
The news casts uncertainty over the future of thousands of workers at its Uk cinemas.
Philippa Childs, head of entertainment and media union Bectu, said: ‘We will do everything we can to support our members during this challenging time and will be looking to Cineworld to mitigate the impact of any bankruptcy arrangements on its employees.’