Cineworld confirms it is considering bankruptcy

Cineworld has confirmed it is considering filing for bankruptcy in the US, as the cinema chain continues to struggle with $5bn worth of debt.

But the company, which also owns the Picturehouse chain in the UK, insisted its cinemas “remain open for business” and that there would be “no significant impact” on jobs.

Cineworld employs more than 28,000 people globally.

Like other cinema chains, Cineworld was hit hard by the pandemic.

Many theatres were forced to close for extended periods during the lockdowns, or had to operate at a reduced capacity due to social distancing rules.

Cinema chains also faced tough competition from streaming services, which soared in popularity during the lockdowns.

More recently though, Netflix – long seen as the king of streaming – reported a sharp fall in subscribers, as the rising cost of living leads to people cutting back.

Cineworld had hoped blockbusters such as the latest Bond film, Top Gun: Maverick and Thor: Love And Thunder would draw audiences back in after lockdown restrictions eased.

But it recently said post-Covid customers levels were still lower than expected and blamed “limited” film releases.

In total, box office takings this year are down a third (32%) compared with the same period in 2019, before the pandemic struck.

On Friday, shares in Cineworld plunged 60% after The Wall Street Journal reported that the firm was preparing to file for bankruptcy “within weeks”.

Responding to that report today, Cineworld said it was looking at various options for how to restructure the business, including a Chapter 11 filing in the US.

The Chapter 11 bankruptcy mechanism allows a company to continue to operate while it negotiates with its creditors.

The company would not comment on whether it was also considering filing for bankruptcy in the UK, or what the potential impact could be on its 4,600 employees there.

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

Cineworld has 128 cinemas in the UK and Ireland. Globally, it has 9,189 screens across more than 750 sites.

It operates in 10 countries, including the US, Poland and Israel.

Cineworld currently has a market value of around $69m but is carrying close to $5bn of debt.

Shares recovered slightly on Monday morning. But at just over 4 pence, the share price is still a long way off from where it was at the start of 2020 (220 pence) before the pandemic struck.