Regal Cinemas, one of the world's largest theater chains, is preparing to file for protection under Chapter 11 of federal bankruptcy law, a report says.
Regal's parent, Cineworld (CNNWF) of the U.K., has engaged the law firm Kirkland & Ellis and the consultants AlixPartners for advice on the bankruptcy process, The Wall Street Journal reported.
The Journal also reported, citing people familiar with the matter, that an insolvency process is being considered for its U.K. operations.
Cineworld is evaluating ways to generate liquidity and possibly restructure the balance sheet, the report says..
This move does not mean that film fans need to worry for now. The bankruptcy protection is designed to allow the company to continue operating while securing the funds needed to continue to recover from the covid pandemic.
While much has been made of box-office recoveries this summer, owing to big hits such as "Top Gun: Maverick," "Elvis" and "Thor: Love and Thunder," this apparently wasn't enough for Cineworld.
The company reported last year that it had $5 billion in debt. Last summer, it secured $200 million in incremental loans.
On Wednesday, Cineworld had said its admission levels had fallen below its expectations. They were “due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term."
Industrywide, movie box-office attendance has been declining for years due to the advent of streaming.