IPic Entertainment Facing Cash Crunch, Late Debt Payments and Potential Bankruptcy

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IPic Entertainment warned investors on Friday that it is facing a cash crunch that could push the theater chain into Chapter 11.

In public filings, the company said it had not been able to get the funds it needed to pay a $10.1 million interest payment to the Employees Retirement System of Alabama (ERSA) and the Teachers Retirement System of Alabama. The theater circuit said it had approximately $204 million of indebtedness to the pension fund under a credit facility it had established.

“We do not have adequate cash on hand or other available assets to repay our outstanding indebtedness and RSA could foreclose upon the property that is pledged to secure the credit facility, which includes substantially all of our assets,” the company warned investors. “If we are unable to restructure our outstanding indebtedness, including our credit facility with RSA, our significant indebtedness and lack of liquidity will have a material adverse effect on our business, prospects, financial condition, and our ability to continue as a going concern.”

IPic made it clear that RSA had not informed it the exhibitor was in default despite the fact that it missed an interest payment that was due on July 1. IPic said in the filing that it had cash-on-hand of $2.2 million.

A spokesperson for RSA and iPic did not immediately respond to a request for comment. Shares of iPic closed at just over $2 on Friday, a 4.10% increase.

IPic, which currently operates 123 screens in 16 locations, including California, Arizona, Florida and New York, was founded in 2006 by Hamid Hashemi with the goal of providing a luxury experience to moviegoers. With ticket prices topping $30, iPic customers can watch movies from recliner seats while ordering high-end food and cocktails.

IPic is also notable for its ties to Netflix, as it was the first chain to screen the company’s original films on the same day they were available to stream for subscribers. For years Netflix has faced contentious roadblocks in attempts at shrinking the theatrical window, a 90-day period that movie theaters demand to have films before they move to spaces like paid rentals and streaming video on demand. The iPic deal was also a crucial factor in helping Netflix enter the awards race, as the Oscars mandate a small theatrical run to qualify for consideration.

However, the company warned investors in its most recent quarterly report that it needed to find new capital or find a way to restructure its debt. To that end, it said it has engaged financial and legal advisers to look at strategies to address its liquidity issues.

“We may elect to implement a restructuring or a strategic alternative through Chapter 11 in order to obtain court approval of such transactions and to facilitate the stakeholder approvals necessary to implement such transactions, or it may otherwise become necessary for us to seek protection under Chapter 11,” the company filing reads.