LONDON, England: UK cinema chain Cineworld Group, the world's second-largest cinema chain operator, has filed for bankruptcy protection in the U.S. due to its multi-billion dollar debt.
The Chapter 11 filing, which allows firms to stay in business while attempting to restructure their debt, involves most of Cineworld's businesses in the U.S., the UK and Jersey.
According to Cineworld, it aims to intended to fully pay all its vendors and continue paying employees their regular wages, in order to emerge from Chapter 11 protection during the first quarter of 2023.
It added that its group's companies have $1.94 billion in debt from existing lenders, and it expects to operate its global business and cinemas as usual throughout the process.
In 2020, Cineworld abandoned plans to take over Canadian rival Cineplex, which it is currently in a legal dispute with, as Cineplex seeks $946 million in damages. Cineworld has told holders of existing equity interests that there was no guarantee of any recovery, but it does not expect the filing to result in a suspension of trading in its London shares.
It added that Cineworld plans changes to its U.S. real estate strategy and would engage with landlords to improve U.S. cinema lease terms.
Cineworld's problem of debt amassed over the years is in addition to the cinema industry's struggle to recover from the COVID-19 lockdown.
At the end of 2021, Cineworld's net debt, including lease liabilities, was $8.9 billion, and excluding lease liabilities, its net debt was $4.84 billion.
Operating more than 9,000 screens across 10 countries and employing some 28,000 people, Cineworld took on debt to fund part of its $3.6 billion acquisition of Regal in 2017, and more to enable it to continue operating during the pandemic.