Cineworld confirms it is considering bankruptcy

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Image Source: Express and Star

As the movie theater company continues to struggle with $5 billion in debt, Cineworld has acknowledged that it is considering declaring bankruptcy in the US. However, the corporation, which also owns the Picturehouse chain in the UK, stated that there would be “no significant impact” on employees and that its theaters would “stay open for business.”

Cineworld, which has more than 28,000 employees around the world, was hit hard by the pandemic, just like other movie theaters.

Due to laws about social distance, several theaters had to close for long periods of time or operate with fewer seats during lockdowns.

The latest Bond movie, Top Gun: Maverick, and Thor: Love And Thunder, were among the blockbusters that theater owners had hoped would entice customers back when lockout restrictions were relaxed.

Tom Cruise’s Top Gun: Maverick, one of the top 10 highest-grossing movies of all time, has earned $1.8 billion worldwide. However, Cineworld cautioned last week that there weren’t enough blockbuster movies being released to draw moviegoers and that this was hurting admissions.

According to Comscore, global box office receipts in 2019 reached a record $42.5 billion before the outbreak, helped by movies like Avengers: Endgame and Frozen 2.

Movies like Jurassic World: Dominion and Minions: The Rise of Gru have done well so far in 2022. But as compared to 2019, box office receipts this year are down by around a third, or 32%.

Streaming affected traditional companies like Cineworld

During the lockdowns, streaming services became more popular and have also been a serious threat to movie theater chains.

When Universal Pictures released Trolls: World Tour online at a time when theaters had to close due to the coronavirus in 2020, Cineworld and rival AMC, which controls the chain of Odeon Cinemas, got into a fight.

In order to screen movies in theaters before they are streamed, Cineworld and Warner Bros later came to an agreement.

More recently, Netflix reported a steep decline in subscribers due to consumers’ budget cuts due to the rising cost of living.

After The Wall Street Journal reported that Cineworld was poised to file for bankruptcy “within weeks,” the company’s shares fell 60% on Friday.

Cineworld said on Monday that it was thinking about different ways to change its business, including filing for Chapter 11 in the US.

This enables a business to carry on operations as it bargains with its creditors.

The business declined to comment on whether it was also considering declaring bankruptcy in the UK or what effect it could have on its 4,600 UK workers. It also declined to comment on what would happen to customers who paid for memberships at Cineworld or Picturehouse or who had gift cards in the event that the company declared bankruptcy.

“Cineworld would expect to maintain its operations in the ordinary course until and following any filing,” the company said in a statement. “Cineworld would expect to continue its business over the long term with no significant impact upon its employees.”

In the UK and Ireland, Cineworld operates 128 theaters. It has 9,189 screens in total, spread over more than 750 venues. It is active in ten nations, including the United States, Poland, and Israel.

Read Also: Cineworld shares take a hit on bankruptcy fears 

Although Cineworld has a market value of about $69 million, it is nearly $5 billion in debt.

The company has grown by making acquisitions all across the world. But it gave up on a plan to buy Cineplex two years ago, which led to a long legal battle in which the Canadian company demanded a lot of money from Cineworld.

On Monday morning, Cineworld’s stock price slightly increased. However, the share price is still far from where it was at the beginning of 2020, when it hit 220p before the pandemic struck, at just over 4p.