Cineworld eyes 2023 resurrection from Chapter 11 bankruptcy

Controversial cinema group Cineworld expects to emerge from Chapter 11 bankruptcy in the first half of 2023 as it considers bids for “part or all” of the company.

But Cineworld’s long-suffering shareholders appear to be left out in the cold, as it warned it does not expect a sale transaction to “provide any recovery for holders of the company’s equity stakes.”

Last September, the cinema chain plunged into Chapter 11 bankruptcy, allowing it to continue trading and borrowing money with court clearance, as Cineworld grapples with a £4bn mountain of debt and a lackluster recovery from Covid-19 forced closures .

But on Friday it revealed it had received initial proposals from a number of counterparties for some or all of its activities. None, however, involves a cash offer for the entire company.

Cineworld is also in talks with stakeholders about a possible reorganization plan in parallel with a possible sale of its assets.

The group said: “In light of the level of existing debt that is expected to be forgiven under a Plan, the Company does not believe there will be sufficient creditors for a Plan contemplating recovery of equity interests, and it is therefore at this time does not expect any Plan to provide any recovery for the holders of Cineworld’s existing equity interests.

“Based on the current status of these discussions, Cineworld now expects to be out of Chapter 11 cases in the first half of 2023.

“While any sales transaction due to factors such as the marketing process could delay emergence beyond the first half of 2023, the company remains committed to getting out of Chapter 11 cases as quickly as possible.”

Cineworld shares, which remain listed, fell more than 20 percent in early trading to 3.17p. After starting 2020 with a value of 220 pence, the share price has almost collapsed.

Cineworld did not provide details on who the potential buyers are, but recent reports point to contact with rival Vue and at least 30 other parties since early December 2022.

Any potential deal will also inevitably raise questions about the future of chief executive Mooky Greidinger, who was recently convicted of a criminal offense by a court in Israel.

Head of Investment at Interactive Investor Victoria Scholar said: ‘While the embattled cinema chain looks set to emerge from bankruptcy proceedings this year, shareholders are likely to suffer with little chance of a deal to save its equity interests.

Last month, Cineworld denied media speculation that it was in talks to sell some of its assets to AMC.

‘Cineworld had a very hard time during the pandemic. Covid meant movie theaters were closed for months, Hollywood couldn’t produce hits, and consumer preference shifted to streaming, causing lasting damage to ticket demand even after movie theaters reopened.

‘Moreover, for example, Sky now releases new blockbusters around the same time as the cinemas, which reduces the incentive to go out and organize a cinema trip. Moreover, Cineworld itself also had problems with the compensation of £700 million for the cancellation of the acquisition of Cineplex.’