The second largest cinema chain in the world, the U.K.’s Cineworld, has filed for bankruptcy protection in the United States.
The group runs 751 movie theaters in the world, including more than 500 in the United States, and has suffered from low audience numbers brought on by the COVID-19 pandemic and other factors.
Cineworld, which owns Regal Cinemas in the States, said in a statement that it “will seek to implement a deleveraging transaction that will significantly reduce the group’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate, and capitalize on, Cineworld’s strategy in the cinema industry.”
The Chapter 11 filing allows the chain to remain in operation while the company restructures. In the statement Cineworld said it hoped to emerge from bankruptcy proceedings by the first quarter of next year and had secured $1.94 billion in financing from existing lenders to help.
The film industry has returned slowly following the COVID-19 lockdowns. Cinema chains like Cineworld banked on blockbusters like Top Gun: Maverick, Thor: Love and Thunder, and The Batman to bring audiences back to pre-pandemic levels. But for some companies that return has been far too gradual, and Cineworld said in August that “recent admission levels have been below expectations.”
Cineworld has also been hit by costly legal disputes. Last September it agreed to pay over $150 million to shareholders of Regal who were upset about the price it paid to buy the chain in 2017. And in December a court ordered the company to pay more than $800 million over a decision made to abandon a plan to takeover the Canadian competitor Cineplex.
Following the news of the bankruptcy protection filing, shares in Cineworld rose 10% on the London Stock Exchange, but were still down 87% from the beginning of this year.