Cineworld considering bankruptcy but ‘no significant impact’ on jobs
Bosses at Cineworld are considering whether to put the world’s second largest cinema chain into bankruptcy.
They confirmed on Monday they were looking at options for restructuring the business, which is struggling under heavy debts.
This might lead to a Chapter 11 bankruptcy filing in the US. Chapter 11 is often referred to as reorganisation bankruptcy and does not mean the end of the line for the company.
Firms including General Motors and Marvel Entertainment have in the past made Chapter 11 filings, only to bounce back later.
The announcement from Cineworld came days after the Wall Street Journal first reported the company was on the verge of declaring itself bankrupt.
A Chapter 11 gives companies a chance to propose a reorganisation, and the banks, suppliers and employees they owe money to are allowed to vote on the plan.
After the filing is made, the company remains in control of its assets and does not have to shut down or liquidate its business to pay off debts.
It is also protected from foreclosure and repossessions.
Cineworld has three branded outlets in Scotland – one in Fountain Park in Edinburgh, as well as cinemas in Glasgow and Falkirk.
The Cameo Picturehouse in Tollcross is also part of the Cineworld chain.
“Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and
members,” the company told shareholders.
“The strategic options through which Cineworld may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process.
“Cineworld is in discussions with many of its major stakeholders, including its secured
lenders and their legal and financial advisers.”
Importantly, the company’s cinemas would be able to continue to trade throughout the whole process.
It brings some respite for workers at the 127 cinemas that Cineworld runs in the UK, which include the Picturehouse chain.
Globally the cinema giant employs around 28,000 people across ten countries.
A statement issued on behalf
ofthebusinesssaid:“cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer termwithnosignificantimpact upon its employees.”
But the company added that shareholders were likely to see their holdings in the cinema chain watered down.
It has been a tough couple of years for anyone in the cinema business, despite recent blockbuster
releases such as Top Gun: Maverick, The Batman and Thor: Love And Thunder.
Many theatres were forced to close for extended periods during Covid lockdowns, or had to operate at a reduced capacity for social distancing.
Last week Cineworld told investors that, while demand hasrecoveredalittle,customers have not been flocking to cinemas in the expected numbers.