North America's second-largest exhibitor Loews Cineplex plans to shutter 675 of its nearly 3,000 screens in North America as it reported a third quarter loss of $185m. The closures represent 23% of its screens in the US and Canada. The company also suggested it will file for bankruptcy protection in the coming days, a decision analysts have been predicting for the past two months.
New York-based Loews recently opened its books to investment bank GE Capital so that it can prepare a so-called "debtor in possession" financing structure. Under "debtor-in-possession" guidelines, the debtor is in a position similar to a Chapter 11 trustee and thus has a legal responsibility to act in the best interests of its creditors, and not in its own best interest.
Three major US circuits have filed for bankruptcy protection: Edwards Theatres, Carmike Cinemas and United Artists. Loews Cineplex faces a series of crucial dates, beginning January 26, the expiry date of the extension provided by its principal creditors, and February 1, when a $13.3m payment is due to bond holders.