Those of you old enough to remember will recall the days of queuing to get into the local cinema to watch the likes of the latest Bond movie, the original Star Wars perhaps, or even Grease. There were no reserved seats and it was a case of first come, first served.
The cinema industry has moved on from those halcyon days, but the key ingredient has remained the same; a good film to attract the audience.
And here lies a problem. Due to the pandemic, many of those blockbuster films were suspended and even to this day are yet to be released. The first ingredient to the business model is suddenly missing.
The world’s second largest cinema chain is Cineworld who operate 751 sites across 10 countries (102 of which are in the UK). Cineworld recently announced they were consulting with solicitors after reporting suffering a £429 million loss in the last financial year. It was also reported the group had liabilities of a staggering £4 billion.
In those “Good old days” there were no videos, DVDs or live streaming, so if you wanted to see the latest blockbuster movie you had to visit the cinema, or wait 2-3 years for its release on television, normally around Christmas.
In modern society, these films become readily available shortly after their release. Indeed, this has been an issue with many scheduled film releases being delayed. A statement from Cineworld about their current plight said,
“Despite a gradual recovery of demand since reopening in April 2021, recent admission levels have been below expectations.” This is as a result of few films being available to attract the audience.
It is now being muted that Cineworld may enter into Chapter 11 (in the USA) and some form of restructuring vehicle in the UK.
At Cineworld, film releases are its raw materials, whereas admissions equate to their income. At PBC we are seeing many businesses that are suffering a similar fate, only film release is replaced by materials, for example and admissions are similarly replaced with customers who, for one reason or another, are suspending or even cancelling orders. Both of these issues have an adverse impact on cashflow and, in some cases, jeopardise the viability of the company itself. “Cash is king” we are all led to believe, yet if a business cannot secure the supplies or is prevented from continuing with a contract then it is at serious risk of failure.
If you require any advice or assistance on mediation or any insolvency-related issue, then please contact PBC Business Recovery & Insolvency to discuss and advise on your situation on 01604 212150 or email to enquiries@pbcbusinessrecovery.co.uk. Alternatively, visit www.pbcbusinessrecovery.co.uk for further information.