Cineworld has announced today that they have commenced filing for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Southern District of Texas. The filing involves only Cineworld operations in the U.K., the U.S., and the British crown dependency of Jersey.
In their announcement, Cineworld expresses the expectation of emerging from Chapter 11 in the first quarter of 2023; until that time, cinemas will remain in operation as per usual, with customer membership programs (including both and subscription programs) expected to still run as before.
Part of Cineworld’s restructuring process will involve a “real estate optimisation strategy” in the U.S.; this will include discussions with U.S. landlords to hopefully come to more favorable lease terms. During the Chapter 11 process, Cineworld will “seek to implement a de-leveraging transaction that will significantly reduce the Group’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate, and capitalise on, Cineworld’s strategy in the cinema industry. The Group Chapter 11 Companies enter the Chapter 11 cases with commitments for an approximate $1.94 billion debtor-in-possession financing facility from existing lenders, which will help ensure Cineworld’s operations continue in the ordinary course while Cineworld implements its reorganisation,” per the chain’s official announcement.
Says Cineworld CEO Mooky Greidinger:
“We have an incredible team across Cineworld laser focused on evolving our business to thrive during the comeback of the cinema industry. The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point. This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business. This will allow us to continue to execute our strategy to reimagine the most immersive cinema experiences for our guests through the latest and most cutting-edge screen formats and enhancements to our flagship theatres. Our goal remains to further accelerate our strategy so we can grow our position as the ‘Best Place to Watch a Movie’.”
Cineworld is the second largest exhibitor globally and in the Europe and North American markets; in the U.K./Ireland market, it is the number one cinema chain by screen count. Cineworld entered the North American market in 2018 when it acquired Regal, which then as now trails only AMC in terms of screen count. In December of 2019, Cineworld announced plans to acquire Cineplex, the largest chain in Canada. The deal, which would have made Cineworld the world’s largest exhibitor, fell through in the summer of 2020. The Canadian courts sided with Cineplex in the subsequent lawsuit, though Cineworld has said they plan to appeal.
Cineworld’s bankruptcy is the highest-profile to hit the industry since the pandemic caused a near-global cinema shutdown early in 2020. Others to file have been Alamo Drafthouse (which emerged from Chapter 11 months later), Studio Movie Grill (which also subsequently emerged from bankruptcy), and CMX Cinemas.
The pandemic’s effects on the cinema industry can still be felt, most notably through a continued paucity of theatrical release from studios—though, as Greidinger notes, the success of a key handful of films proves the public’s willingness to go to the movies for the right content. He writes: “I am deeply grateful for the continued support of our stakeholders throughout this process and beyond, including our dedicated team members, loyal guests and members. We look forward to continuing to provide guests and members with the best cinematic experiences for years to come. The outstanding success of recent blockbusters such as Spider-Man: No Way Home; No Time to Die; Top Gun: Maverick; Dune; Minions: The Rise of Gru; Thor: Love and Thunder and others proves clearly that people love to go to the movies and that, once supply of product returns, our business will reap the benefits.”