Cineworld US bankruptcy and what this means for Warrington

The business said yesterday, Wednesday, that it had filed for a chapter 11 proceeding in the US in a bid to buy time to restructure its business.

It is designed to allow the debt-ridden chain the chance to bounce back from its current woes, caused in part by the pandemic and a lack of popular recent films.

But what does this mean for Cineworld’s cinemas in the UK, and the firm’s flagship cinema in Warrington within Time Square leisure complex?

At present, cinemas will stay open and continue to trade throughout the period of bankruptcy, despite the chain struggling under heavy debts.

Cineworld opened its impressive Time Square venue in December 2019, and paired with uncertainty following events at neighbouring Gravity and Newton’s, its loss would be a ‘huge blow’ for the town.

This is according to Warrington Guardian readers, who gave their thoughts when news of potential bankruptcy first surfaced.

One said: “It is such a shame. Whenever we have been in it has never been full, and it is a very good cinema. It would be sad to see it close. It has been nice having a cinema in town centre again.”

Another commented: “It is a cracking cinema, dead handy and easily accessible. It would be a huge blow to the area if it closes just more than two years since opening.”

Cineworld runs 127 cinemas in the UK, which include the Picturehouse chain, while globally, the cinema giant employs around 28,000 people across 10 countries.

It has been a tough couple of years for the cinema business, despite recent blockbuster releases such as Top Gun: Maverick, The Batman and Thor: Love and Thunder.

Cineworld previously told investors that, while demand has recovered a little following the pandemic, recently customers have not been flocking to cinemas in the numbers that had been expected.

Chief executive Mooky Greidinger said: “The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point.”

Cineworld Warrington at Time Square (Image: Unknown)

Although sounding dramatic, chapter 11 bankruptcies are quite different from other forms of declaring that a business has gone bankrupt.

They mean the company will be able to hold on to all its assets and trade as normal for the time being, with Cineworld stating it plans to emerge from bankruptcy in the first three months of 2023.

It is ‘confident that a comprehensive financial restructuring is in the best interests of the group and its stakeholders, taken as a whole, in the long term’.

The bankruptcy will give the business a chance to renegotiate with its landlords in the US and ask for better deals.

Mr Greidinger said: “This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business.

“This will allow us to continue to execute our strategy to reimagine the most immersive cinema experiences for our guests through the latest and most cutting-edge screen formats and enhancements to our flagship theatres.

“Our goal remains to further accelerate our strategy so we can grow our position as the ‘best place to watch a movie’.”

The company added: “Cineworld and its brands around the world – including Regal, Cinema City, Picture House and Yes Planet – are continuing to welcome customers to cinemas as usual, which will not change during the chapter 11 cases.

“The group expects to continue to honour the terms of all existing customer membership programmes, including Regal Unlimited and Regal Crown Club in the United States and Cineworld Unlimited in the UK.”

Chapter 11 bankruptcies do not mean the end of the line for the company, with firms including General Motors and Marvel in the past making chapter 11 filings, only to bounce back later.

A chapter 11 gives companies a chance to propose a reorganisation, and the banks, suppliers and employees they owe money to are allowed to vote on the plan.

After the filing is made, the company remains in control of its assets and does not have to shut down or liquidate its business to pay off debts, while it is also protected from foreclosure and repossessions.