The British cinema giant Cineworld, which manages more than 9,000 screens in 751 cinemas and in ten different countries, announced on Wednesday that it was filing for bankruptcy protection in the United States in an attempt to find new liquidity.
This procedure, which offers the possibility for a company to remain in business and restructure its debt, only concerns group entities present in the United States (more than 500 cinemas concerned), the United Kingdom and Jersey (about a hundred of rooms). And if it is supposed to allow the British company the establishment of “deleveraging transactions to strengthen its accounts”, Cineworld hopes to get out of it “during the first half of 2023.”
Pandemic and debt
In question, the group evokes the health crisis, which has heavily affected cinemas: “The pandemic has been an incredibly difficult time for our business, with the forced closure of cinemas and some form of disruption to film schedules leading us to where we are,” laments Cineworld chief executive Mooky Greidinger.
To the consequences of the health crisis is added an accumulation of debts partly due to the disproportionate ambition of the British group. Because after the takeover of Regal Entertainment by Cineworld for nearly 6 billion dollars in 2018, the failure of the merger with the Canadian chain Cineplex the following year had come to increase the debt of the company, to reach nearly 9 billion. dollars at the end of 2021.
Also, if a movie like «Top-Gun : Maverick»which raked in nearly $1.5 billion this year, has given hope to the world of the big screen, and that big productions like «Mission Impossible 7» et «Avatar 2» are expected by the end of the year, observers fear that the locomotives represented by such block busters are not enough.
Deserted rooms
Because despite these big productions, Eric Snyder, bankruptcy specialist at the law firm Wilk Auslander, points to the gradual desertion of the rooms: “Taking the time to go to the cinema, for a film that lasts two or three hours, and spending 20 or 25 dollars there, is no longer an attractive activity for many people, especially the youngest,” he remarks.
Finally, if the British group, which does not operate in France but employs more than 28,000 people worldwide, ensures that its activities will continue without interruption during its reorganization, Eric Snyder recalls that the creditors “don’t give much time” to the company to reorganize or seek a takeover, and that Cineworld does not have the financial windfall of its American competitor AMC. At the risk that more and more cinemas remain forever plunged into darkness.