Cineworld has revealed that it is considering filing for bankruptcy in the United States as it continues to struggle with $5 billion in debt.
However, the corporation, which also owns the Picturehouse chain in the United Kingdom, stated that its theatres would “stay open for business” and that there would be “no substantial effect” on employment.
Cineworld employs over 28,000 employees worldwide.
Similar to other theatre businesses, Cineworld was severely affected by the epidemic.
Due to social distance regulations, several theatres were compelled to close for extended periods during lockdowns or operate at a reduced capacity.
After lockout limits were lifted, theatre chains believed that blockbusters such as the newest Bond film, Top Gun: Maverick, and Thor: Love and Thunder would lure back viewers.
Tom Cruise’s Top Gun: Maverick has grossed $1.8 billion worldwide, making it one of the ten highest-grossing films of all time.
However, last week Cineworld cautioned that there were still not enough blockbuster films to draw crowds and that this was affecting ticket sales.
According to Comscore, global movie office receipts reached a record $42.5 billion in 2019 before the epidemic, driven by films such as Avengers: Endgame and Frozen 2.
Films such as Jurassic World Dominion and Minions: The Rise of Gru have performed well thus far in 2022.
In contrast, box office receipts this year are down around a third, or 32%, compared to 2019.
Streaming services, whose popularity increased throughout the lockdowns, have also presented cinema chains with formidable competition.
In 2020, Cineworld and rival AMC, which owns the Odeon Cinemas network, criticized Universal Pictures for releasing Trolls: World Tour online when theatres were closed due to coronavirus.
Cineworld later secured a contract with Warner Bros to screen films in theatres before their streaming availability.
Recently, Netflix announced a precipitous decline in members, as the growing cost of living causes consumers to cut back.
Shares of Cineworld fell 60% on Friday after The Wall Street Journal reported that the company was preparing to file for bankruptcy “within weeks.”
Cineworld announced on Monday that it was considering several alternatives for reorganizing the business, including a Chapter 11 file in the United States.
This allows a company to maintain operations while creditors are negotiated with.
The company declined to comment on whether it was also considering declaring bankruptcy in the United Kingdom or on the potential impact on its 4,600 employees there.
It would also not comment on what would happen to those who have paid for Cineworld or Picturehouse memberships or have coupons in the case of bankruptcy.
In a statement, the company stated: “Cineworld expects to continue business as usual until and after any filing, and to continue its operations over the long term with no substantial impact on its workers.”
Cineworld operates 128 theatres in the United Kingdom and Ireland. It has 9,189 screens across more than 750 sites worldwide.
It is active in ten nations, including the United States, Poland, and Israel.
Cineworld has a current market value of approximately $69 million but carries close to $5 billion in debt.
The company has developed globally through acquisitions. However, it abandoned a proposal to acquire Cineplex two years ago, resulting in a lengthy legal struggle as the Canadian company sought hefty damages from Cineworld.
Monday morning saw a minor rebound for Cineworld shares. But at little over 4p, the share price is still a significant distance from where it was at the beginning of 2020 when it reached 220p before the pandemic.
