British entertainment conglomerate, Cineworld is preparing to file for bankruptcy after it fails to get enough recovery from movie-going since the end of the pandemic.
The world’s second-largest cinema chain, which has accumulated debt of more than $4.8 Billion after the losses rose with cinemas shutting down due to COVID-19, has hired lawyers from Kirkland and Ellis and consultants from restructuring experts AlixPartners to advise on the process, The Guardian reports.
According to the Wall Street Journal, Cineworld is expected to file a chapter 11 petition in the US and considers bankruptcy proceedings in the UK.
The company’s already battered share price crumples from 20p to 2p after the report. Pre-pandemic, it used to trade at £1.97.
On Wednesday, The move follows the market value of Cineworld more than halving after the company said that it had started talks with stakeholders about a financial rescue package, blaming a lack of blockbuster films for lower-than-expected admissions.
The group states that it was in “active discussions with various stakeholders” and evaluating strategic options to attain additional liquidity and potentially restructure its balance sheet for reducing the debt.
It also warned that any deleveraging transaction is expected to result in a very significant dilution of existing equity interests in Cineworld.
