AMC Entertainment Holdings Inc (NYSE:AMC) runs the planet’s biggest chain of cinemas but like many other entertainment businesses; it has struggled massively due to the coronavirus pandemic. Earlier this week, the company was back in the news after it made a major announcement with regards to its financial situation. It might be a good time to take a closer look at the developments.

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Stock Sale and Bankruptcy Warning

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AMC has had a tough time in recent months and this past Monday, the company announced that it is going to sell as many as 15 million shares. However, this announcement was also accompanied by a warning to the investors. AMC warned that it might eventually have to file for bankruptcy.

It has emerged in a security filing that AMC currently has a cash pile of $417 million and it is going to need a fresh injection of capital by the end of 2020 if it is to remain an ongoing business.

In addition to that, the company categorically stated that in the event of not raising a sufficient amount of cash, AMC would file for bankruptcy. The other option is to restructuring of debts throughout court channels.

Shares Fell

Following the revelations from the above-mentioned securities filing, the market reacted poorly. The AMC stock fell by as much as 12% on Monday and it remains to be seen how it performs over the coming weeks.

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More importantly, it is also necessary to note that as of Thursday, the stock was down by as much as 58% in 2020. A Chapter 11 bankruptcy allows companies to continue to conduct their business while it works on its obligations.

However, AMC was quick to add that if it does eventually go for that option then the shareholders are going to be left with nothing. They will be left with a 100% loss.

A glimmer of hope?

While it cannot be denied that the latest news with regards to AMC is not a positive one, it should be noted that 2021 could well prove to be a wholly different situation for the company.

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While Disney’s Tenet proved to be a flop, many studios are going to return to production and start releasing their movies in 2021. In such a situation a cinema chain like AMC could find just the right boost for its prospects. If the company can manage to remain operational, then it could prove to be a big boost for its stock as well.

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