AMC Entertainment is reportedly considering a bankruptcy filing as the coronavirus shutdown has brought the movie industry to a halt.
As the New York Post reported, per MarketWatch, the largest chain of movie theaters in the United States has been in talks with the law firm Weil Gotshal & Manges on a Chapter 11 bankruptcy filing. A source told the news outlet that talks are still in the early stages and that the theater chain could be looking at some other form of restructuring. However, it appeared the company is leaning toward a bankruptcy filing.
The source noted that the law firm's legal team is led by lawyer Ray Schrock, who is known for working on bankruptcy filings for other major companies such as retailer Sears Holdings.
"You don't hire Ray unless you are filing," the source said. "You are not going to hire them at their hourly rate to have a beer with them."
Variety also cited experts who said that AMC's bankruptcy filing appeared increasingly more likely. The report cited financial analyst Eric Handler, who wrote a note to investors earlier in the week saying that the theater chain would have trouble making it through until nationwide lockdowns are eased later this year.
"Based on our view that theatres will be closed until at least August and our belief that AMC lacks the liquidity to stay afloat until that time, we expect the company will soon be faced with filing for bankruptcy," wrote the MKM Partners analyst, who downgraded the theater chain's stock from "neutral" to "sell."
Movie theaters across the country have been shuttered during the spread of the coronavirus, with no clear timetable of when they could open up again or even what state the movie industry could be in when they do return. Major movie studios have also halted production on a number of projects, moved release dates back to 2021 for some movies, and released others on streaming platforms.
As the New York Post noted, AMC closed all 630 theater locations in the United States on March 17, furloughing nearly 25,000 employees.The report noted there had already been signs that the company was struggling to stay afloat, with Senior Vice President Daniel Ellis writing a letter to landlords informing them that the company would be unable to pay rent starting in April.
"AMC is willing to discuss with you any suggestions you may have for getting through this crisis and planning for when AMC can reopen and pay rent," Ellis wrote.