Cineworld shares dive again on US bankruptcy fears

Cineworld shares tanked again as speculation grew last night that it was on the brink of bankruptcy.

Reports suggested the cinema chain was preparing to file for Chapter 11 bankruptcy in the United States as soon as today and that its American arm will begin talks with landlords about potential closures.

The UK business, which includes 127 cinemas, is not expected to be impacted by the bankruptcy filing. But the group’s shares still plunged 34.1 per cent, or 2.02p, to 3.9p.

A Chapter 11 bankruptcy filing would let the firm stay in business while restructuring its debt. It will also protect the company from its lenders while bosses negotiate a rescue deal.

A collapse threatens to completely wipe out the holdings of Cineworld chief executive Mooky Greidinger and his brother Israel, deputy chief executive, who together own just over 20 per cent of the group through their family vehicle Global City.

The pair have led Cineworld to the brink of insolvency after it entered the Covid-19 pandemic with huge debts and was then forced to shut its cinema complexes for months at a time.

This is despite the brothers receiving nearly £26million in pay over the last eight years.

The company is creaking under a debt mountain of £7.5billion, almost 140 times its market cap of just £53.6million.

It has also racked up an £800million legal bill over its botched deal to buy Canadian rival Cineplex.

Last week, the company was dealt another blow after Jangho Group, its biggest independent shareholder, slashed its stake from 11.6 per cent to 1.6 per cent.