Theater Chain AMC Reportedly in Talks to Hire Chapter 11 Counsel

AMC, the country's largest movie theater chain, is reportedly in talks to hire a law firm to spearhead its bankruptcy case.
Publish date:

Shares of AMC Entertainment  (AMC) - Get Report, the largest theater chain in the U.S., dropped more than 20% following a report that the company is in talks to hire law firm Well Gotshal & Manges to explore a potential Chapter 11 filing. 

Talks are still in the early stages, according to a New York Post article citing sources.

The team at Well Gotshal is being headed by Ray Schrock, who recently worked as bankruptcy counsel to PG&E, Fairway and Sears. 

AMC shares fell 20% to $2.08 at last check. 

Speculation about a potential bankruptcy filing have swirled for some time, leading analysts at Loop Capital  last week to downgrade the stock on concern about a potential Chapter 11 filing. 

AMC in mid-March shut its U.S. theaters - 1,000 of them with some 11,000 screens - for six to 12 weeks. And it recently sent a letter to landlords stating that it would stop paying rent.

At the start of April, The Wall Street Journal reported, citing people familiar with the matter, that lenders to AMC had hired the law firm of Gibson, Dunn & Crutcher for advice on expected restructuring talks.

Loop Capital's Alan Gould last month noted that the box office was down more than 60% year to date in March.

AMC ended 2019 with $265 million in unrestricted cash and $332 million in undrawn credit, Gould estimated in last month's note. 

He also projected negative cash flow of $285 million in the first half of the year and said the coronavirus "could lead to some liquidity issues."