Luxury Cinema Chain iPic Files for Chapter 11 Bankruptcy, Eyes Sale

iPic cinema seats - H 2019
Courtesy of iPic Entertainment

The company initiated bankruptcy court proceedings, saying it would "seek approval of either a sale or a reorganization plan and emerge with a healthy balance sheet and new capital structure."

Luxury theater chain iPic Entertainment said Monday that it has filed for Chapter 11 bankruptcy protection and is pursuing a sale or financial reorganization.

The company submitted a court filing in the District of Delaware to initiate proceedings under the Chapter 11 bankruptcy code, saying it would "seek approval of either a sale or a reorganization plan and emerge with a healthy balance sheet and new capital structure."

Said iPic, "The financial restructuring will allow the company to further improve and enhance its theaters and dining experiences, continue to provide an unparalleled guest experience that is evidenced by the over 2 million iPic Access loyalty members, and continue with its expansion plans."

iPic said it owed approximately $205 million “in unpaid principal under the pre-petition loan agreement, plus interest and fees” and owed “various vendors, suppliers, and other unsecured trade creditors between approximately $13 million to $15 million.” 

The company has lined up $16 million in so-called debtor-in-possession financing to continue operations. The court filing showed that it currently operates 123 screens at 16 locations in nine states, with an additional two locations under construction. The firm also has leases for an additional nine sites.

The company said it has approximately 240 full time and 1,770 part-time employees. iPic recently also applied for licenses to operate theaters in Saudi Arabia. "The debtors continue to pursue a disciplined new store growth strategy in both new and existing markets where they may achieve consistent high store revenues and attractive store-level cash-on-cash returns," the company said.

The court filing said that the company last month engaged investment bank PJ Solomon to help it with its Chapter 11 process, with the banking firm contacting "parties with a track record of successfully investing opportunistically in transactions with turnaround potential."

It said Solomon has contacted 64 parties in total, of which 31 have signed nondisclosure agreements, with six continuing to negotiate nondisclosure agreement terms. "As of the petition date, approximately eight parties have been granted access to the debtors’ electronic data room," iPic added, without disclosing any names. One Wall Street observer suggested cinema chains and financial companies, such as private equity firms, could benefit from buying the company.

India’s largest cinema chain, PVR Cinemas, owns a 2 percent stake in iPic, which has been publicly traded since February 2018. Its stock was down nearly 60 percent in pre-market trading on Monday at $0.68.