Cineworld Files For Bankruptcy As Pandemic Zaps Theater Chain

Britain's Cineworld filed for bankruptcy protection in the United States on Wednesday, as the world's second-largest cinema chain operator struggles to rein in its massive debt. The Chapter 11 filing involves Cineworld's US, UK and Jersey operations, covering the bulk of its business, Reuters reported.

Photo Insert: Cineworld, the world's second-largest cinema chain operator, is struggling to rein in its massive debt.

Cineworld, which operates under the Cinema City, Picturehouse, Regal, and Yes Planet brands, was founded by Steve Wiener after he left his job as managing director of Warner Bros Europe in 1995.

Private equity firm Blackstone bought Cineworld from a consortium of investors including the group's management in 2004 and the company purchased UGC's cinema operations in Britain and Ireland, becoming the second largest cinema operator in the UK.

In 2009, Blackstone slashed shareholding in Cineworld to 20% and sold out completely the following year. Three years later, Cineworld bought independent movie theatre operator Picturehouse for 47.3 million pounds. In November 2013, Wiener quit after 18 years.

In January 2014, Cineworld became the second-largest cinema chain in Europe after it bought Poland-based Cinema City International's movie theatre business for 272 million pounds in cash.

At the time, Cinema City held 24.9% of Cineworld shares. In December 2017, Cineworld agreed to buy larger US peer Regal Entertainment for $3.6 billion in cash, creating the world's second-largest movie theatre operator.

Two years later, Cineworld announced plans to buy Canada's Cineplex for $1.65 billion in cash, valuing Cineplex at $2.1 billion including debt. The deal involved Cineworld seeking $2.3 billion in loans.

Then, the pandemic came. In March 2020, Cineworld's then-largest shareholder Global City Theatres sold a third of its stake on worries over prospects during the pandemic. The following month, Cineworld shut all its 787 cinemas across 10 countries and starts talks with lenders for liquidity requirements.

The Telegraph reports Cineworld lenders were exploring legal challenges to block the takeover of Cineplex. In June 2020, Cineworld abandons Cineplex deal, citing breaches in the merger agreement.

Cineplex says it will sue Cineworld and seek damages. In October 2020, Cineworld closed UK and US movie theatres again. Less than a year later, the theater chain said it will pay $170 million to Regal shareholders who were disgruntled with the takeover price.

In December 2021, Cineworld was ordered to pay C$1.23 billion ($946.1 million) in damages to Cineplex. Cineworld delayed payments to Regal shareholders. By August 2022, Cineworld prepared to file for bankruptcy.

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