Will AMC Theatres File for Bankruptcy?
One result of the recent virus pandemic is that fewer people are congregating in public. In most states, Governors have issued stay-at-home orders that limit what activities people can engage in. Even in places without these orders, people are sensibly practicing social distancing.
The pandemic has hit movie theaters hard. AMC is one of the largest chains in the country, with many movie theaters in South Florida. However, rumors are starting that the chain could file for Chapter 11 protection very soon.
Cash Crunch to Blame
One report mentioned by Yahoo states that AMC has only enough cash to make it to the middle of summer. After that point, it will be unable to financially reopen, even if social distancing and other measures are lifted.
Consequently, filing for Chapter 11 bankruptcy could make the most sense. Currently, the chain is carrying $4.9 billion in debt, and has a valuation of only $327.3 million. It clearly could benefit by reducing its debt pile, which will free up cash for when operations resume.
The rumors of a pending bankruptcy definitely have teeth. According to some sources, the chain has hired a prominent bankruptcy firm that specializes in Chapter 11 to represent them. AMC has already notified its landlords that it is not paying rent for April—a clear sign the company is in financial distress.
Will AMC Disappear?
If you love the movies, you shouldn’t worry too much about the theaters never reopening. Even if it files for bankruptcy, AMC will not be liquidating. Chapter 11 allows businesses to continue to operate as they reorganize their debts. Companies in Chapter 11 can continue to do business with “critical vendors,” and movie studios and distributors are likely to qualify under that designation. That means AMC can begin showing movies again as soon as they reopen.
Yahoo reports that AMC is planning to reopen at some point in May and is already in touch with studios to find out what films they plan to release. However, this does not mean that all theatres will reopen at the same time. Some will probably remain closed if the pandemic continues to rage in the area.
Ultimately, during its reorganization, AMC might decide to permanently close some theaters around the country. Bankruptcy gives it a chance to take a second look at its leases, and the company might cancel some of them in the process. This can make the company stronger and set it up well for the future. AMC currently has 630 locations across the United States.
We Can Help Your Small Business
Nowack & Olson has assisted many family and small businesses get on top of their debts. We can help you reorganize under Chapter 11 or, if necessary, liquidate your business. There are many important considerations that must be kept in mind to make the right decision for your business.
Please contact our law firm today. Our Plantation bankruptcy lawyers remain open as an essential business in Florida and can consult either in person or over the telephone if you call us at 888-813-4737.