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Cineworld’s shares have plummeted after reports that the cinema chain is preparing to file for bankruptcy “within weeks”.
Shares fell by two-thirds in minutes after the Wall Street Journal reported that the world’s second-largest cinema company hired lawyers from Kirkland & Ellis and advisors from AlixPartners to advise on the bankruptcy proceedings.
Cineworld has declined to comment, but it comes two days after Cineworld said it was reviewing options to shore up its finances after blaming a “limited” film slate for weak viewership in recent months.
The reports raise uncertainty about the future of thousands of workers at Britain’s 127 cinemas.
Cineworld employs around 28,000 people worldwide and operates in 10 countries.
Philippa Childs, leader of entertainment and media union Bectu, said: “This is very worrying news, not least for the UK workforce at Cineworld and Picturehouse, who have already endured a turbulent period during the pandemic.
“The UK cinema industry has taken an incredible blow due to COVID-19 and this latest news will be of great concern to cinema workers.
“We will do everything we can to support our members during this challenging time and will be reaching out to Cineworld to help mitigate the impact of bankruptcy regulations on its employees.”
The company, which also owns the Picturehouse chain in the UK and Regal Cinemas in the US, had pinned its hopes on releases like Top Gun: Maverick, The Batman and Thor: Love And Thunder to recover from the severe effects of the coronavirus Pandemic.
However, it told the London Stock Exchange on Wednesday: “Despite a gradual recovery in demand since reopening in April 2021, recent registration figures have been below expectations.
“These lower admissions are due to a limited film slate which is expected to last through November 2022 and is expected to negatively impact the Group’s trading and cash position in the near term.”
The company, which was burdened with $4.8 billion (£4 billion) in debt at the end of last fiscal year, said it was considering restructuring its balance sheet to secure its future.
At the height of the pandemic, Cineworld temporarily closed its UK cinemas and put 5,500 workers on furlough.