Cineworld confirms it is considering bankruptcy: Cineworld has announced that it is considering declaring bankruptcy in the United States, as the movie company continues to struggle with $5 billion in debt.
However, the corporation, which owns the Picturehouse cinema network in the United Kingdom, stated that its theatres would “stay open for business” and that there would be “no substantial impact” on employees.
Cineworld employs over 28,000 employees worldwide.
Cineworld, like other movie theatre businesses, was severely impacted by the pandemic.
Due to social distance restrictions, several theatres were obliged to close for extended periods of time during the lockdowns, or to operate at a reduced capacity.
Top Gun: Maverick, starring Tom Cruise, has grossed $1.8 billion worldwide, making it one of the top ten highest-grossing films of all time.
However, Cineworld cautioned last week that there were still not enough large films to entice movie crowds, which was affecting admissions.
Cineworld confirms it is considering bankruptcy
According to Comscore, global box office receipts reached a record $42.5 billion in 2019, prior to the pandemic, boosted by films such as Avengers: Endgame and Frozen 2.
So far in 2022, movies like Jurassic World Dominion and Minions: The Rise of Gru have done well.
However, box office receipts are down by around a third, or 32%, this year compared to 2019.
Streaming services, which grew in popularity during the lockdowns, have also posed a significant threat to cinema chains.
In 2020, Cineworld and rival AMC, which controls the Odeon Cinemas network, clashed with Universal Pictures over the release of Trolls: World Tour online at a time when theatres were forced to close due to coronavirus.
Following that, Cineworld negotiated an agreement with Warner Bros to screen films in theatres before they are streamed.
More recently, Netflix reported a steep drop in subscriptions as customers cut back due to increased living costs.
Cineworld shares fell 60% on Friday after The Wall Street Journal reported that the company was planning to file for bankruptcy “within weeks.”
Cineworld announced on Monday that it was considering several alternatives for reorganizing the company, including a Chapter 11 file in the United States.
This enables a corporation to continue operating while negotiating with its creditors.
The company declined to comment on whether it was considering declaring bankruptcy in the United Kingdom, or on the potential impact on its 4,600 employees there.
It also would not speculate on what would happen to those who pay for Cineworld or Picturehouse memberships or have vouchers if the company declared bankruptcy.
“Cineworld would anticipate to retain its operations in the ordinary course until and following any filing and eventually to continue its business over the long term with no substantial impact on its personnel,” the company said in a statement.
Cineworld operates 128 cinemas in the United Kingdom and Ireland. It has 9,189 screens in over 750 locations worldwide.
It has operations in ten countries, including the United States, Poland, and Israel.
Cineworld has a market value of roughly $69 million but is in debt to the tune of $5 billion.
The company has grown through acquisitions all across the world. However, it abandoned a proposal to acquire Cineplex two years ago, resulting in a protracted court battle in which the Canadian corporation sought hefty damages from Cineworld.
Cineworld’s stock recovered somewhat on Monday morning. However, at a little over 4p, the share price is still a long way from where it was at the beginning of 2020 when it reached 220p before the epidemic.
