Is AMC Theatres about to declare bankruptcy? AMC is reportedly in talks with Weil, Gotshal & Manges in an attempt to work through a Chapter 11 bankruptcy filing. This would help the theater try and manage its massive debt load of $4.9 billion while trying to successfully reopen at the same time. Movie theaters across North America have been shut down since the middle of March and a reopening date has yet to be determined. Two weeks ago, AMC was optimistic about being able to open again in June, but it's unclear if that will end up happening now.
It was reported last week that AMC Theatres had their credit downgraded, which meant they would probably have to shut down. AMC closed all of its 630 theaters on March 17th and furloughed 25,000 workers. Sources claim that the chain has ceased paying rent to landlords, which is why the Chapter 11 talks are currently happening. Sources also claim that AMC is "at risk of breaching its debt covenants as it burns through cash," amid the world's current state of affairs.
The Chapter 11 filing may help AMC Theatres stay afloat for a little while, but the world is in a weird spot at the moment. Nearly half of their theaters are located in malls, which will undoubtedly be one of the last public places to open after all of this begins to fade away. Even so, social distancing will more than likely keep open theaters to about half of their normal capacity. China is trying this out at the moment while reportedly taking the temperature of patrons before they enter the theater. This sounds like quite a bit of work to get everything moving again.
It is believed that AMC is in talks to work with Weil Gotshal & Manges for the Chapter 11 filing currently. Specifically, they will work with lead lawyer Ray Schrock, who has handled some pretty big name cases as of late. "You don't hire Ray unless you are filing," a source said. "You are not going to hire them at their hourly rate to have a beer with them." Whatever the case may be, it looks like AMC is trying everything within their power to keep their doors open when they are able to.
In addition to uncertainty of when public places will be allowed to open again and the social distancing, AMC and other theatre chains have to deal with the studios. All of the major studios have pulled and pushed back their big spring and summer release dates, which is a time when theatres are usually thriving. Marvel Studios pulled Black Widow in favor of a winter release date, Universal took Fast & Furious 9, along with a ton of other movies. It is believed DC and Warner Bros. are keeping Wonder Woman 1984 for the August release date, though that seems likely to change in the coming days. It looks like there are some pretty major hurdles to overcome before AMC can even attempt to open its doors again. Market Watch originally reported on AMC filing for Bankruptcy.