Cineworld (LON: CINE) shares have been finally canceled as the company emerges out of bankruptcy amid a restructuring process. The shareholders have got nothing despite the resumption of the company’s operations. If you want to know in simple terms what exactly went wrong with the stock of Europe’s 2nd largest theatre operator, you are at the right place.
It all started with the Cineworld plc facing financial troubles due to the pandemic-induced lockdowns. The debt kept on piling as most of the sites remained closed to the general public. Eventually, in September 2022, the firm succumbed to the piling debt and filed for Chapter 11 bankruptcy in the US.
Cineworld Restructuring Plan
After a nod from its lenders, Cineworld plc, submitted a restructuring plan in the court, which was eventually approved. According to this plan, the existing shareholders of the Cineworld shares had to be wiped out. This resulted in a massive sell-off in the stock throughout July.
On 31st July 2023, the company officially emerged out of its bankruptcy after the appointment of administrators. The assets of the company were transferred to a new holding company, solely controlled by its lenders. The move also meant a cancellation of the Cineworld stock.
How Did Cineworld Exit Bankruptcy?
After failing to secure any suitable deal for its core operations and sites, Cineworld decided to exit bankruptcy on its own. The firm reached an agreement with its lenders which reduced its debt by $4.53 billion. This also enabled it to raise $800 million in new equity capital and $1.71 billion via new debt financing.
While the plan saved the Cinema giant, it failed to provide any value to the shareholders. In the last week of July, the trading of Cineworld shares was suspended on the London Stock Exchange. This was followed by a cancellation of shares and wiping off the shareholders a few days later.
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