Bankrupt Cineworld inches towards deal to save cinemas including Valley Centertainment site in Sheffield

The cinema chain said it had been approached by potential buyers. However, none were willing to pay cash for the whole business. That means any deal could result in shareholders being wiped out.

The world’s second-largest cinema operator is £5billion in debt. It has 128 sites in the UK, including at Valley Centertainment on Broughton Lane, Attercliffe, all of which are operating as normal.

Cineworld filed for US bankruptcy protection, known as Chapter 11, last September after falling into debt when pandemic restrictions shut cinemas. Under Chapter 11, a company is temporarily sheltered from creditors.

Now, landlords and creditors could vote in favour of a deal to allow some theatres to shut to reduce its rent bill, keeping the rest of the business. However, it is believed most likely that an equity swap would be considered to save the chain.

This means creditors end up owning the business while the investors who bought shares will end up with nothing. Cineworld bosses said they hope to recover from bankruptcy protection before the middle of 2023.

Russ Mould, the investment director at the analysts AJ Bell, quoted in the Guardian, said: “We could see a break-up of the group even though Cineworld has previously said it had no plans to sell individual assets. Cineworld has paid the price for being too aggressive with its growth ambitions, weighed down by significant debt when the pandemic struck and the subsequent reopening of the cinema industry being too weak to repair its finances.”