A MAJOR movie theater chain is in talks to close dozens of locations under new plans to shore up its finances.
Cineworld is considering shutting down around a quarter of its 100 or so UK multiplexes, Sky News reports.
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The troubled business placed its UK arm into administration in August 2023. Credit: Getty
Under the plans, up to 25 local cinemas could close permanently.
The chain is also seeking to renegotiate leases for about 50 of its locations.
Struggling businesses often do so to reduce their operating costs and help retain more of their physical assets.
However, landlords do not have to accept what is presented in these discussions.
It means up to 50 additional Cineworld complexes could also be at risk of closure if the chain and its owners cannot reach an agreement.
However, 25 cinemas will not be affected by the restructuring plans and will remain open for the foreseeable future.
THE FINAL DECISION IS COMING
The Sun understands that Cineworld’s creditors and owners will formally receive the plans in the coming weeks.
A creditor is an individual, company or financial institution to whom the company owes money or is obliged to repay the debt.
The restructuring is expected to be carried out through a special bankruptcy mechanism rather than a company voluntary arrangement (CVA).
Insolvency mechanisms aim to either save the company, liquidate it or achieve the best return for creditors.
The huge cinema chain is giving an update on its future after it collapsed into bankruptcy last September
A CVA specifically aims to allow a company to continue trading while paying off its debts over time.
As of July 2024, the cinema chain operates 100 Cineworld-branded cinemas across the UK and Ireland, as well as a further 28 under the Picturehouse brand.
For now, the chain’s screens remain fully operational and open as usual.
A Cineworld spokesman said: “We are continuing to consider our options but do not comment on rumors and speculation.”
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CINEWORLD is not the only chain that is struggling.
What else happened at Cineworld?
Earlier this month, Cineworld was said to be weighing its options and considering a major restructuring, which could include closure.
Sky News has reported that the chain is working with restructuring adviser AlixPartners on a plan that could lead to a sale or restructuring.
According to the publisher, such a move could “risk the closure of an unspecified number of UK cinemas”.
The restructuring plan allows the company to rework its balance sheet, restructure its debts and release cash into operations.
At the time of the report, a Cineworld spokesman said it was “constantly reviewing” its UK operations “like many companies”.
This came after Cineworld emerged from Chapter 11 bankruptcy in the US late last year.
Filing for Chapter 11 bankruptcy means that the company intends to reorganize its debts and assets while remaining in business.
At the time, the future of the chain of 129 UK and Irish cinemas appeared to be in jeopardy.
The company’s shares have fallen nearly 99% in the five years to 2023, as it has been hit particularly hard by the pandemic and the forced closure of its cinema locations.
Shortly afterwards, the UK arm of Cineworld fell into administration on 31 July.
The cinema chain was delisted from the London Stock Exchange a day later.
When a company goes into administration in the UK, all control passes to the appointed receiver, who must be an authorized insolvency practitioner.
Since then, administrators appointed at Alix Partners have been evaluating plans for a major restructuring.
The business posted significant losses as it came under pressure from streaming platforms such as Netflix and Amazon Prime.
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