Cineworld eyes 2023 resurrection from Chapter 11 bankruptcy

Cineworld eyes resurrection from Chapter 11 bankruptcy – but world’s second biggest cinema chain warns investors are set to lose out

  • Cineworld mulls multiple bids for ‘some or all of’ the business
  • Cinema chain says it expects to emerge from Chapter 11 in the first of 2023 

Embattled cinema group Cineworld expects to emerge from Chapter 11 bankruptcy in the first half of 2023, as it mulls bids for ‘some or all of’ the business.

But long-suffering Cineworld shareholders look set to be left out in the cold as it warned that it does not expect that any sale transaction ‘will provide any recovery for the holders of the company’s equity interests’.

In September last year, the cinema chain plunged into Chapter 11 bankruptcy, which allows it to continue trading and borrow money with court approval, as Cineworld struggles under a £4billion debt pile and a lacklustre recovery from Covid-19-enforced closures.

But on Friday it revealed it had received initial proposals from a number of counterparties for some or all of its business. However, none involve an all-cash bid for the entire company.

Cinema chain says it expects to emerge from Chapter 11 in the first of 2023

Cineworld is also in talks with stakeholders about a possible plan of reorganisation in parallel with a potential sale of its assets.

The group said: ‘In light of the level of existing debt that is expected to be released under any Plan, the Company does not believe that there will be sufficient creditor support for a Plan that contemplates any recovery for equity interests, and it is therefore not expected at this time that any Plan will provide any recovery for holders of Cineworld’s existing equity interests.

‘Based on the current status of these discussions, Cineworld now expects to emerge from the Chapter 11 cases during the first half of 2023.

‘Although any sale transaction resulting from the Marketing Process, among other things, may delay emergence beyond the first half of 2023, the Company remains committed to emerging from the Chapter 11 cases as expeditiously as possible.’

Cineworld shares, which remain listed, fell more than 20 per cent in early trading to 3.17p. Having began 2020 with a value of 220p, the share price has all but collapsed. 

Cineworld gave no details on who the potential buyers are, but recent reports have indicated contact with rival Vue and at least 30 other parties since the start of December 2022.

Any potential deal will also raise inevitable questions about the future of chief executive Mooky Greidinger, recently handed a criminal conviction by a court in Israel.

Head of investment at Interactive Investor Victoria Scholar said: ‘While the embattled cinema chain looks set to come out of bankruptcy proceedings this year, its shareholders are likely to suffer with little chance of a deal to salvage its equity interests.

‘Last month Cineworld denied media speculation that it had been in discussions over the sale of some of its assets to AMC.

‘Cineworld had an extremely tough time during the pandemic. Covid meant that cinemas were closed for many months, Hollywood was unable to churn out hits and consumer preferences shifted towards streaming instead which has caused lasting damage for ticket demand even after movie theatres reopened.

‘On top of that, Sky for example now releases new blockbusters around the same time as the cinemas, again reducing the incentive to leave the house and organise a cinema trip. Plus, Cineworld also had problems of its own with its £700 million damages bill for abandoning its takeover of Cineplex.’