Cineworld ‘preparing to file for bankruptcy’ according to reports

Cineworld, the world’s second-largest cinema chain and owner of the Broughton Retail Park multiplex cinema is ‘preparing to file for bankruptcy’, according to reports.

The Wall Street Journal is reporting that the chain could file for bankruptcy “within weeks” after struggling to rebuild attendance from pandemic lows, according to people familiar with the matter.

According to WSJ sources the company has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process, “Cineworld is expected to file a chapter 11 petition in the U.S. and is considering filing an insolvency proceeding in the U.K.” They said.

Cineworld is yet to comment on the WSJ report, in a trading statement on Wednesday the company said:

“Despite a gradual recovery of demand since re-opening 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.”

“Consequently, the Group has been taking proactive steps to ensure it has the balance sheet strength and flexibility to adapt to market conditions.”

“This includes significant previously disclosed operational and financial initiatives to manage costs and enhance liquidity. The Group believes these steps are required to optimize its ability to maximize enterprise value as part of the recovery in the cinema industry.”

“In connection with these initiatives, the Group remains in active discussions with various stakeholders and is evaluating various strategic options to both obtain additional liquidity and potentially restructure its balance sheet through a comprehensive deleveraging transaction.”

Following the statement Cineworld market value more than halved.