AMC Movie Chain Seeks Bankruptcy To Bounce Back

AMC, the world’s largest cinema chain, has taken a massive blow to revenue this year among the economic turmoil brought about by the pandemic.  Prior to pandemic, AMC was already struggling to alleviate the pressure an existing $5 billion in debt crushing its bottom line.  Nearly nine month later, the company is seeking relief through Chapter 11 bankruptcy.

Since the beginning of the year, AMC company shares have decreased by 60%; 30% of which has plummeted in the last week alone. Last Friday, AMC agreed to accept a $100 million investment by Mudrick Captial Management. This investment is outlined to help the cinema chain survive the financial impact of the pandemic. However, the investment is not nearly enough some say to ensure operations survive the long haul.

Industry analysts have said that while the $100 million investment will help minimize negative outcomes for massive closures, the company reportedly still needs $750 million in liquid assets to fund employee retirements through the year 2021. Therefore, many industry experts agree that the Chapter 11 bankruptcy option is the most solid path out of financial hardship and back into more solid financial footing. Further, AMC is likely to experience other benefits that bankruptcy provides; such as allowing the termination or renegotiation of lease agreements, which can provide more wiggle room in overall operating expenses.

There is hope afloat for AMC and cinema fans, as the reorganization sought by AMC executives is aimed at protecting one of American’s favorite past times.

Source: https://www.cnbc.com/2020/12/16/amc-could-benefit-from-bankruptcy-analysts-say.html