The chain of movie theaters, Cineworld, has disclosed that it is considering filing for bankruptcy in the US as it struggles with $5 billion in debt. However, according to the organization, which also owns the Picturehouse chain in the UK, the company will “stay open for business,” and there will be “no major impact” on the workers.
The pandemic badly hurt Cineworld, which operates movie theaters and has more than 28,000 employees globally.
During the lockdowns, many theaters had to close for long periods of time or operate with fewer seats because of social distance restrictions.
Blockbusters like the most recent Bond film, Top Gun: Maverick, and Thor: Love and Thunder were among those that theater owners hoped would draw patrons back once lockout restrictions were eased.
Top Gun: Maverick, starring Tom Cruise, is one of the ten highest-grossing films of all time, with a global gross of $1.8 billion. Cineworld warned in a statement last week that fewer blockbuster movies were coming out, which was affecting how many people went to the movies.
Before the outbreak, according to Comscore, a record $42.5 billion was made at the global box office in 2019, thanks to films like Frozen 2 and Avengers: Endgame.
Jurassic World Dominion and Minions: The Rise of Gru will be popular movies in 2022. In contrast, this year’s box office earnings are down around 32% from last year’s.
How streaming platforms relegated the likes of Cineworld
Streaming services became more popular during the lockdowns and are a major threat to movie theater chains.
The moment Trolls: World Tour by Universal Pictures was made available online, conflict broke out between Cineworld and its rival AMC, which runs the network of Odeon Cinemas, when the coronavirus prompted theaters to close in 2020.
Later, Cineworld and Warner Bros. agreed to pre-screen movies in theaters before they are streamed.
More recently, due to consumers’ spending reductions owing to the rising cost of living, Netflix reported a sharp decline in memberships.
The Wall Street Journal said that Cineworld was going to file for bankruptcy “within weeks,” and the company’s stock price dropped 60% on Friday.
On Monday, Cineworld announced that it was looking into several options for corporate restructuring, including filing for Chapter 11 in the US.
This means a company can keep doing business as usual while talking with its creditors.
The company chose not to comment when asked whether it was thinking about filing for bankruptcy in the UK and what impact it may have had on its 4,600 UK workers. It also declined to address what would happen to customers who paid for memberships at Cineworld or Picturehouse or who owned gift cards in the event that the company declared bankruptcy.
The company said in a statement that it “would want to carry on its business” in the “ordinary course” before and after filing.
In the long run, Cineworld anticipates being able to carry on with little interference from its staff. “
Cineworld runs 128 cinemas in the UK and Ireland. There are more than 750 venues with a total of 9,189 screens. In addition, it provides services to ten countries, including Israel, the US, and Poland.
Despite having a market value of around $69 million, Cineworld is nearly $5 billion in debt.
Read also: Cineworld considers filing for bankruptcy
The business has expanded by acquiring businesses all across the world. But it gave up on plans to buy Cineplex two years ago, which led to a long court battle in which the Canadian company sued Cineworld for a lot of money.
The stock price of Cineworld dramatically jumped on Monday morning. Currently trading at just over 4p, the share price is still significantly lower than where it was at the beginning of 2020 when it reached 220p before the pandemic struck.
