Cineworld expects to exit bankruptcy protection in July, but shareholders move to stop wipeout plan
Struggling cinema chain Cineworld now expects to emerge from Chapter 11 bankruptcy protection in July, but a complaint from shareholders who risk getting wiped out could put that in doubt.
The business, which also includes Picturehouse, agreed a deal in April where creditors would take control of the business, wiping out shareholders, in order to cut its debts by $4.5 billion.
With this deal having received initial approval from a Texas bankruptcy court and creditors holding 69% of Cineworld’s debt, Cineworld said it should now exit bankruptcy protection in the next two months, in time for summer releases such as Barbie and Oppenheimer.
However, a group of shareholders owning a 7% stake has filed a motion arguing the valuation of Cineworld used in the restructuring plan is “inaccurate, biased and unreliable”. They argued the valuation was based on data that came soon after the end of the pandemic, and therefore was not representative of normal trading.
A valuation of more than the $3 billion used for the plan could allow for some funds to be distributed back to shareholders. The group also asked for the option to buy out creditors at the $3 billion valuation.
The court will review their complaint on 28 June, alongside a hearing to confirm the restructuring plan.
Cineworld said it was committed to exiting bankruptcy protection as soon as possible, having previously warned that the legal fees associated with Chapter 11 could cause it to run out of money before proceedings were complete. It filed for bankruptcy protection in September 2022 and paid $3.1 million in legal fees for March.
The company continues to operate as usual during the restructuring period.