Exhibition giant and Regal owner Cineworld Group has begun Chapter 11 bankruptcy proceedings in the U.S., saying on Wednesday it has “commenced Chapter 11 cases” in the United States Bankruptcy Court for the Southern District of Texas.

“As part of the Chapter 11 cases, Cineworld, with the expected support of its secured lenders, will seek to implement a de-leveraging transaction that will significantly reduce the group’s debt, strengthen its balance sheet and provide the financial strength and flexibility to accelerate, and capitalize on, Cineworld’s strategy in the cinema industry,” the second-largest movie theater chain explained. “The group Chapter 11 companies enter the Chapter 11 cases with commitments for an approximate $1.94 billion debtor-in-possession financing facility from existing lenders, which will help ensure Cineworld’s operations continue in the ordinary course while Cineworld implements its reorganization.”

The filing of a proposed plan of reorganization with the bankruptcy court would happen “in due course,” with the goal to emerge from Chapter 11 “as expeditiously as possible,” the firm said. “Cineworld currently anticipates emerging from Chapter 11 during the first quarter of 2023 and is confident that a comprehensive financial restructuring is in the best interests of the group and its stakeholders, taken as a whole, in the long term.”

The London-headquartered company operates the Regal cinemas in the U.S., as well as Cineworld and Picturehouse venues in the U.K. Overall, it operates 747 sites and 9,139 screens in 10 countries.

As part of its restructuring, said it would “pursue a real estate optimization strategy in the U.S. and intends to engage in collaborative discussions with U.S. landlords to improve U.S. cinema lease terms in an effort to further position the group for long-term growth.”

The cinema powerhouse reiterated that any de-leveraging transaction would result in “very significant dilution of existing equity interests,” meaning shareholdings, adding that “there is no guarantee of any recovery for holders of existing equity interests.” The company does not expect the Chapter 11 filing to result in a suspension of trading in its shares on the London Stock Exchange though.

The debt-laden company, led by CEO Moshe “Mooky” Greidinger, had said in an Aug. 17 statement that it was eyeing unspecified strategic options as it was struggling to get through the summer doldrums for Hollywood tentpoles in its theaters. The Wall Street Journal later said Cineworld was preparing to file for bankruptcy protection and start a Chapter 11 proceeding in the U.S., while also considering an insolvency process in the U.K.

Chapter 11 bankruptcy protection offers the world’s second-biggest exhibitor a way to continue its operations, while securing capital needed to continue the box office revenue recovery coming out of the COVID pandemic.

“We have an incredible team across Cineworld laser-focused on evolving our business to thrive during the comeback of the cinema industry,” Greidinger said. “The pandemic was an incredibly difficult time for our business, with the enforced closure of cinemas and huge disruption to film schedules that has led us to this point. This latest process is part of our ongoing efforts to strengthen our financial position and is in pursuit of a de-leveraging that will create a more resilient capital structure and effective business. This will allow us to continue to execute our strategy to reimagine the most immersive cinema experiences for our guests through the latest and most cutting-edge screen formats and enhancements to our flagship theatres. Our goal remains to further accelerate our strategy so we can grow our position as the ‘best place to watch a movie’.”

Cineworld had warned in mid-August that its admission levels had fallen below its expectations. The weaker trends were “due to a limited film slate that is anticipated to continue until November 2022 and are expected to negatively impact trading and the group’s liquidity position in the near term,” it said.