Cineworld Group PLC (LSE:CINE) has confirmed it might file for Chapter 11 bankruptcy in the United States and in other jurisdictions to enable it to restructure.
Responding to media reports, the British cinema chain said it is preparing to file for bankruptcy in the US and is considering filing an insolvency proceeding in the UK, after failing to entice viewers back to movie theatres.
Shares of the company plunged on Friday after a report in the US.
Cineworld said it will continue to operate in the ordinary course until and after any filing, with no significant effect on its employees. with cinemas globally open for business as usual.
It was forced to close worldwide during the pandemic incurring losses of US$2.7bn in 2020 and US$566mln in 2021.
Despite a "gradual recovery of demand" since last spring, Cineworld said admissions were below expectations, citing a limited repertoire of films and adding the situation would continue through November.
The strategic options will be carried out through an orderly implementation process, the company said in the statement, adding it is in talks with major stakeholders, including its secured lenders and their legal and financial advisors.
A Chapter 11 filing would allow the group to access "near-term liquidity" and enable the orderly implementation of a fully funded deleveraging transaction, the company said, though it would lead to a significant dilution of shareholders.