Luxury Theater Chain iPic Files For Bankruptcy Protection
It seems news of retailers filing for bankruptcy protection is becoming quite common. Until recently, the growing popularity of online sales or a newer, more in-demand product hitting the shelves caused once-popular mega-chains or smaller brick-and-mortar storefronts to make the decision to close their doors. Now it appears that higher-end luxury retailers and “experience” providers are also feeling burdened by the evolving marketplace. On the heels of retailer Barneys’ fairly recent bankruptcy filing, luxury theater iPic announced plans to file earlier this week.
Based in Boca Raton, Florida, the financially-troubled luxury theater chain iPic made the decision to file for Chapter 11 bankruptcy earlier this month. The business also plans to seek out a buyer as it overhauls and assesses its debts.
The company’s management team stated that it plans to keep all of its theaters open and workers employed during this time, while still maintaining payments to vendors. This statement comes after iPic announced that it missed a $10.1 million interest payment to a major creditor, lacked sufficient cash to pay off its debts, and warned that a Chapter 11 filing could occur.
iPic offers a movie-going experience with in-theater dining and luxury seating at 123 screens in 16 cities across the county. The company stated it still plans to continue with further developments amid the Chapter 11 filing. Further developments could occur under new ownership, however, as iPic recently hired Wall Street firm PJ Solomon as its financial advisor.
Within its bankruptcy filing, iPic listed nearly $290.9 million in debts. Top creditors include Walt Disney Studios, SONY Pictures, Universal Film Exchange, and Paramount Pictures, among others. “Our brand is thriving and leads the industry in popularity, but our balance sheet needs to course correct,” CEO Hamid Hashemi said in the company’s statement on the filing. “Our theaters will remain open during this transition, our employees are being paid, as are our vendors and suppliers.”
Back in March, Hashemi announced a plan to open additional locations of the luxury theater in several Florida cities. However, after its recent filing, the CEO cited the business’s financial problems as the cause for delays with expansion plans, including “the high cost of capital” and the depletion of funds “before the company was able to reach critical mass.”
Started a decade ago, iPic’s business plan called for the construction of 25 locations in four to five years, but fell short of the mark. “[i]Pic was the first and only company building luxury theaters just 10 years ago, before the industry took notice,” Hashemi said. Since taking notice, much larger chains have adopted the concept and grabbed a sizable amount of the business, analysts say. Some observers believe there won’t be much left for creditors once the bankruptcy case is resolved. iPic leases the buildings that house its theaters, and while the leases can still have value during the Chapter 11 proceedings, the company’s overall assets are limited.
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