Regal Cinemas owner Cineworld is preparing to file for bankruptcy as movie theaters struggle to win back audiences after the pandemic ravaged the business, according to a report.
Cineworld, which owns Regal, the second-largest US movie theater chain, has engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process, The Wall Street Journal reported, citing unnamed sources.
The London-headquartered Cineworld is expected to file for chapter 11 bankruptcy in the US and is mulling filing an insolvency proceeding in the UK, according to the report.
Cineworld and Alix Partners declined to comment. Kirkland did not immediately respond to a request for comment.
The already struggling movie theater industry had been dealt a near-deadly blow during the pandemic, which forced many screens to temporarily dim. When COVID restrictions began to ease, theaters reopened but with a dearth of new films as Hollywood, too, had ground to a halt at that time.
Even now with more big films in theaters like Brad Pitt’s “Bullet Train,” Tom Cruises’ “Maverick” and the animated flick “DC League of Super-Pets,” moviegoing isn’t as strong as it used to be.
Cineworld, which blamed a limited slate of blockbuster titles, said on Wednesday that it was “evaluating various strategic options” in the face of lackluster attendance.
“Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations,” the company said in an update. “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.”
November happens to be when Marvel’s “Black Panther: Wakanda Forever” hits the big screen, and until then, big, buzzy movies will be lacking.
As a result, Cineworld is currently negotiating with its lenders to fund the cost of the bankruptcy process, The Journal added.
Regal’s parent company narrowly escaped bankruptcy in 2020 when its nearly 800 movie theaters were temporarily closed due to the pandemic. The company got a $750 million lifeline from its creditors to avoid bankruptcy.
AMC, the largest movie theater chain in the world, has faced similar problems linked to the pandemic, but it has managed to raise more than $2.2 billion of equity to stay afloat, thanks to its meme-stock status.