The British movie theater chain Cineworld, weighed down by a mammoth debt pile, filed for Chapter 11 bankruptcy in the United States on Wednesday, having failed to rebound from the pressure inflicted by the pandemic.
Cineworld, the world’s second-largest theater chain after AMC Theaters, will seek to significantly reduce its debt through reorganization, the company said in the filing.
The company, which is based in London and operates Regal Cinemas in the United States, reported $8.9 billion in debt at the end of 2021, including $4 billion in lease liabilities. Some of the debt was taken on in the pandemic as the company sought to outlast lockdowns that had sapped its revenue.
Cineworld said Wednesday in its filling that it had secured $1.94 billion in debtor-in-possession financing that would allow it to keep up its operations while it restructures its obligations.
Movie theaters worldwide have faced financial challenges in the last few years, brought on by popular streaming services like Netflix and pandemic shutdowns. Some theater chains have resorted to a number of tactics to bring in revenue, including membership packages, mobile food ordering and expanded alcohol sales.
The period from May to October typically accounts for 40 percent of annual ticket sales, but theaters struggled this summer despite strong turnout for films like “Jurassic World Dominion,” “Minions: The Rise of Gru” and “Thor: Love and Thunder.”
Cineworld did not immediately respond to a request for comment.
“The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point,” Mooky Greidinger, the company’s chief executive, said in the filing. “This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business.”
Shares of Cineworld, which are traded on the London Stock Exchange, have lost close to 86 percent of their value since the beginning of the year and the company reported a loss of $565.8 million in its most recent earnings report.
The filing signals a substantial decline for the company. Before the pandemic, Cineworld had entered an agreement to acquire the Canadian company Cineplex, but it backed out of the deal in June 2020 after the pandemic hit. Cineplex sued for breach of contract, winning a fine of close to $1 billion from a Canadian judge, which Cineworld has yet to pay.
