Boca Raton, Fla. — Luxury movie theater company IPIC Entertainment (Nasdaq: IPIC) has filed for Chapter 11 bankruptcy in the United States Bankruptcy Court District of Delaware where it will seek approval of either a sale or financial reorganization plan. In July, the company missed a $10 million interest payment to Retirement System of Alabama (RSA) and notified investors that it might have to file for bankruptcy. IPIC borrowed $204 million from RSA, according to media reports.
Hamid Hashemi, founder and CEO of IPIC, says that the company’s movie theaters will remain open and its employees and vendors are being paid. Hashemi notes that issues stemming from IPIC’s expansion plans for building 25 locations in four to five years are the principal culprit behind their missed payment to RSA.
“Delays in development cycle combined with the high cost of capital depleted IPIC’s available resources before the company was able to reach critical mass and become self-funded,” says Hashemi. “Importantly, delays related to the Delray Beach location, resulted in unforeseen costs and a significant slowdown in circuit-wide development and new grand openings.”
IPIC’s stock price closed Friday at $1.67 per share, down from $7.30 per share a year ago and $3.20 on July 5 of this year. Representing IPIC through the bankruptcy process are Pachulski Stang Ziehl & Jones LLP as legal counsel, Aurora Management Partners as the financial adviser and PJ Solomon as the investment banker. IPIC anticipates that the restructuring process will conclude in 90 to 120 days.
The Boca Raton, Florida-based company operates 16 dine-in theaters in nine states with plans to open locations in four more states. According to its first quarter earnings statement, same-store sales for the company were down 21.7 percent in first-quarter 2019 compared to first-quarter 2018.