Cineworld, the world’s second largest cinema chain, is preparing to file for bankruptcy 'within weeks' after failing to see a quick enough recovery in movie-going since the end of the pandemic.
The Wall Street Journal reported that Cineworld is preparing to file for bankruptcy, sending its share price tumbling. The company has now hired lawyers from Kirkland & Ellis and consultants from restructuring experts AlixPartners to advise on the process. The company is expected to file a chapter 11 petition in the US and is considering insolvency proceedings in the UK.
The London-listed business operates in 751 sites in 10 countries with over 27,000 employees.
Philippa Childs, Head of Entertainment and Media Union Bectu, said: “This is very worrying news, not least for the UK’s Cineworld and Picturehouse workforce who have already been through a tumultuous time during the pandemic.
“The UK’s cinema industry suffered an incredible blow due to CV19 and this latest news will be very unsettling for cinema workers."
Cineworld temporarily shut its UK cinemas and placed 5,500 workers on furlough at the height of the pandemic.
“We will do everything we can to support our members during this challenging time and will be looking to Cineworld to mitigate the impact of any bankruptcy arrangements on its employees," Ms Childs added.
A lack of blockbuster films
The announcement comes just two days after Cineworld said its market value has halved and is now in talk with stakeholders about a financial rescue package, blaming a lack of blockbuster films for the lower-than-expected admissions. The company had high hopes for releases such as Top Gun: Maverick, The Batman and Thor: Love And Thunder to aid its recovery from the heavy impact of the pandemic.
The company told the London Stock Exchange: "Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations.
“These lower levels of admissions are due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term.”
Failure to lure back moviegoers
Susannah Streeter, Senior Investment and Markets Analyst at Hargreaves Lansdown, said Cineworld had "failed to lure back enough moviegoers to help pay back its enormous debts".
"Hopes had been raised that first spies, then superheroes, then fighter pilots would prove to be the magic bullets for the company but there simply haven't been enough blockbusters coming through to break the spell of misfortune," she said.
The BBC has stated that the cinema industry was one of the worst hit sectors during the height of the pandemic with many theatres closed for extended periods or operating at reduced capacity.
Cineworld reported a huge loss for the first six months of 2020 after it was forced to temporarily close some cinemas, and movie studios delayed the release of some blockbusters.