Second largest cinema chain in the world files for bankruptcy

Cineworld Group – the world’s second-largest movie theater chain and owner of Regal Cinemas – said on Wednesday it has filed for Chapter 11 bankruptcy protection.

Chapter 11 is what the American bankruptcy filing law is about in which the company continues to operate and thus maintains a kind of protection against creditor actions while the company tries to organize its accounts and debts. Chapter 7 of the law deals with bankruptcy with full liquidation and closing of the business.

The British company, which owns more than 500 movie theaters in the United States, said it has initiated Chapter 11 proceedings in the US Bankruptcy Court for the Southern District of Texas to get rid of the company’s debt. It also expects the action to “strengthen its balance sheet and provide financial strength and flexibility to accelerate and capitalize on Cineworld’s strategy in the film industry.”

The company added that it has access to nearly $2 billion in financing from existing lenders to continue operating. Cineworld also said in the document that it “expects to operate its global businesses and cinemas as usual throughout this process.”

The company warned late last month that a voluntary Chapter 11 filing was one of the options it was looking at to reduce its debt.

“We have an incredible team at Cineworld laser focused on evolving our business to thrive as the film industry returns,” said Mooky Greidinger, CEO of Cineworld, in a statement Wednesday. “The pandemic has been an incredibly difficult time for our business, with the forced closure of theaters and a massive disruption to film schedules that has brought us to this point.”

Greidinger added that the bankruptcy filing is “part of our ongoing efforts to strengthen our financial position and is pursuing a deleveraging that will create a more resilient capital structure and effective business.”

“This will allow us to continue to execute on our strategy to reimagine the most immersive cinematic experiences for our guests through the latest, cutting-edge screen formats and enhancements across our flagship theaters,” he added. “Our goal remains to further accelerate our strategy so that we can grow our position as the ‘Best Place to Watch a Movie’.”

Like many theaters, Cineworld struggled through the pandemic, which ravaged the industry and is still impacting screening. The global health crisis caused movie theaters around the world to close and the company lost $2.7 billion in 2020 and another $566 million in 2021.

The economy has improved for cinemas, but the return to normal is still a long way off.

The domestic box office rebounded this summer thanks to big hits like “Top Gun: Maverick” and “Jurassic Park: Dominion,” as well as smaller hits like “Elvis” and “The Black Phone.” However, the film presence has dried up in recent weeks amid a shortage of new films and supply chain problems hitting Hollywood and many resources go straight to streaming.

Mark Thompson and Anna Cooban contributed reporting.