iPic Entertainment filed for Chapter 11 bankruptcy on Monday, and hopes to restructure its debt and strengthen its balance sheet and will pursue a sale.
In its bankruptcy filing, the luxury theater chain said the plan is to either sell itself or reorganize to come out with a healthy balance sheet and new capital structure. The company is currently in talks to restructure its debt with numerous parties.
“The decision to commence a Chapter 11 case to pursue a comprehensive restructuring was not taken lightly, but is necessary to accomplish our long-term goals and secure the company’s future,” said Hamid Hashemi, the company’s founder and CEO.
Last week, iPic was unable to make a $10.1 million interest payment to the Employees Retirement System of Alabama and the Teachers Retirement System of Alabama. At the time, iPic said it had $2.2 million in cash on hand.
The company’s business plan called for building 25 locations in 4 to 5 years. Delays in the development cycle combined with the high cost of capital depleted iPic’s resources before the company was able to become self-funded.
“Delays related to the Delray Beach (Florida) location resulted in unforeseen costs and a significant slowdown in circuit-wide development and new grand openings,” Hashemi explained.
The theaters will remain open during the transition, and vendors, suppliers, and employees will continue to be paid. The company anticipates the restructuring process will conclude in 90 to 120 days.
Same-store sales at the theater chain had been on the decline in 2018, but fell 21.7% in the first quarter of this year.
iPic went public in February 2018 and raised $15.1 million to fund its expansion. In its most recent quarter it reported a net loss of $9.3 million, or $1.26 a share, for the quarter to March 31, wider than the $6.4 million loss, or $1.70 a share, posted in the year-earlier period.
With 16 locations in nine states, iPic has a total of 123 movie screens.
On Monday, iPic Entertainment was trading at 66 cents, down $1.01, or 61%. The stock opened at a high of 82 cents and with a low of 58 cents.