Will Cineworld, owners of the Regal theater chain in the United States, be able to move past its Chapter 11 bankruptcy proceedings and regain its lost ground? Last week we saw the company make an announcement that it expects to be able to close the chapter (pun intended) on its bankruptcy proceedings soon, but that recovery will come at the cost of its international operations. Our expert entertainment attorney from Blake & Wang P.A, Brandon Blake, unpacks the news in full.
The State of Theaters
Possibly the hardest-hit arm of the wider entertainment industry during the pandemic, it’s been a slow road to recovery for many theatrical exhibition chains. A process that hasn’t been helped by COVID-induced pipeline delays and reduced slates overall. Despite a relatively buoyant mood among most Americans about returning to the cinema and the lure of the ‘silver screen’ experience, without sufficient content released to theaters to keep traffic in their doors, a true Box Office recovery remains elusive.
Perhaps counter-intuitively, it has been the larger chains that have been the hardest hit, and Cineworld, the parent of Regal, and its descent into Chapter 11 bankruptcy proceedings has been a key news story over the last few months.
Selling International Cinemas
With final bids now due on April 10, Cineworld has announced ‘several’ key parties interested in taking over their theaters in non-US locations- meaning Israel and Europe, with the exclusion of the UK. However it seems the company itself will not be going under the hammer. While there has reportedly been 2 bigs made for the entire operations, both were too low to be worth considering.
Instead, it appears that they will be presenting a ‘comprehensive restructuring plan’ and attempting to move forward with a refined operation. This plan, and the potential international buyers, may reach the courts as early as Wednesday this week, although the announced April 20 date may remain more realistic. Everything should be confirmed by May 26. We’ve already seen many of the theaters labeled for permanent closure continue operations as renegotiated leases with landlords hit the table. As it stands, debtors will end up with full ownership of the publicly traded company.
At this point, it’s probably worth mentioning that there are reports on the market that Amazon may be looking at purchasing itself a theatrical chain. AMC Entertainment, which has so far managed to avoid bankruptcy proceedings but is also struggling to truly make it back into profit territory in the post-pandemic era, has recently been looking at consolidating its balance sheet by leveraging the so-called meme stock status it achieved in 2020 into a more solid stock model. While most shareholders have voted positively on the proposed changes to its existing stock, they are still waiting for the outcome of a court hearing from a disgruntled shareholder before the measures can move ahead.
While the current Box Office slate will remain a little lackluster until some key May releases, things are looking up for the theatrical industry in general, with many more releases scheduled for this year than we’ve seen in the last three years. Whether it will be the major chains we’ve been used to showing those films, however, remains to be seen.
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