Cineworld has filed for bankruptcy in Texas in an effort to tame its $5 billion (€5bn) debt pile.

The UK-based cinema chain, which draws most of its revenues from the US after its acquisition of Regal Cinemas in 2018, filed for Chapter 11 protection on Wednesday. Chapter 11 allows a company to continue operating while it works out a plan to repay creditors.

Cineworld has commitments for $1.94 billion of bankruptcy financing lined up from existing secured lenders, the company said in a statement. The company’s management and board of directors will remain in control of the business.

The company expects to “significantly slash its debt load with the support of its lenders in Chapter 11″, according to the statement. It is also planning to renegotiate its leases with US landlords and “pursue a real estate optimisation strategy”, it said. Cineworld is the second-largest cinema chain, with more than 9,000 screens across 747 locations.

In August, Cineworld surprised investors with an announcement that it was looking to restructure its balance sheet, in a move that will “likely result in a very significant dilution of existing equity interests”.

Cinema operators have been struggling to recover from the Covid-19 slump amid a weak release schedule and stronger competition from online streaming platforms. — Bloomberg