Cineworld (GB:CINE) announced in a statement that the company has filed for Chapter 11 bankruptcy in the U.S. after the company struggled post-pandemic and with fewer Hollywood blockbusters on the release schedule.
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The company already had a huge pile of debt post its acquisition of Regal Entertainment in 2017.
Chapter 11 is a debt restructuring process administered by a court that helps distressed companies come up with a plan that is in the best interest of their creditors while staying in business.
Cineworld 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 capitalise on, Cineworld’s strategy in the cinema industry.”
Struggling stock prices
The company’s stock performance has been disappointing since the start of the pandemic. The stock has lost almost 98% of its value in the last three years.
The shares dropped sharply in the last few weeks after the company announced it was considering financial restructuring of its business and could file for bankruptcy.
Most recently, the company’s second-largest shareholder, Jangho Group also sold almost all his stake after the bankruptcy news started doing the rounds. Jangho Group, led by Liu Zaiwang had previously been seen as a possible buyer of the business.
What does Cineworld do?
Cineworld is a UK-based entertainment company and is one of the leading cinema groups.
The company’s acquisition of Regal Entertainment Group in 2017 made it the second largest cinema chain in the world.
The company operates in 10 countries across the world and has around 9,189 screens.
Conclusion
Cineworld hopes to come out stronger from its bankruptcy by the first quarter of 2023. The company is still in operation, with its theatres open for business.
