AMC Movie Chain Files Chapter 11 Bankruptcy
In 2019, the domestic box office hit the second highest record for profitability; bringing in some $11.4 billion. Prior to March of this year, many predicted that the profitability in 2020 would achieve a similar record. However, the entertainment and nightlife industries have taken one of the largest blows to profitability due to the pandemic.
As the world’s largest cinema chain, AMC has struggled to maintain any level of profitability this year. AMC company shares have decreased by 60%; 30% of which has plummeted in the last week alone. However, it isn’t solely the consequences of a sudden health crisis that brought the financial insolvency AMC is currently experiencing. Prior to this year, AMC was already struggling to resolve some $5 billion in existing debt. As 2020 draws to a close, AMC has filed for bankruptcy in hopes of reorganizing debts and maintaining operations.
Last week, in efforts to resolve growing debt burdens and better position themselves for financial recovery, 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 company reportedly still needs $750 million in liquid assets to fund employee retirements through the year 2021.
Therefore, many industry experts agree that AMC could survive the current economic climate if they are granted debt relief through a Chapter 11 bankruptcy. 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.