Cineworld has confirmed it may file for bankruptcy in the US, days after its shares plummeted over reports the world’s second largest cinema chain was in difficulties.
The UK-based company, which employs around 28,000 people in 10 countries, said it was considering options for how to restructure the business as it wrestled with hefty debts.
These included a Chapter 11 bankruptcy filing, which is often referred to as a reorganisation bankruptcy and does not mean the company has gone bust.
Firms such as General Motors and Marvel Entertainment have previously taken this course of action and later recovered.
The announcement by Cineworld, which also owns the Picturehouse chain in the UK and Regal Cinemas in the US, came days after the Wall Street Journal reported that the company was on the verge of declaring it is bankrupt, sending the group’s stocks crashing.
The business, which was saddled with £4bn of debt at the end of the last financial year, previously said it was in talks with stakeholders over potential funding or considering restructuring its balance sheet.
The company said; “Cineworld and Regal theatres globally are open for business as usual and continue to welcome guests and members.
“The strategic options through which Cineworld may achieve its restructuring objectives include a possible voluntary Chapter 11 filing in the United States and associated ancillary proceedings in other jurisdictions as part of an orderly implementation process.
“Cineworld is in discussions with many of its major stakeholders, including its secured lenders and their legal and financial advisers.”
It said its cinemas would be able to continue to trade throughout the process.
“Cineworld would expect to maintain its operations in the ordinary course until and following any filing and ultimately to continue its business over the longer term with no significant impact upon its employees,” the business said.
But it pointed out shareholders are likely to see their holdings in the cinema chain watered down as a result of the filing.