Luxury movie theater chain iPic Entertainment, which helped lead the rise of dine-in moviegoing, has filed for Chapter 11 bankruptcy protection and will pursue a sale, the company said Monday.
However, the Boca Raton, Fla.-based firm, which has 16 locations, including theaters in Westwood and Pasadena, will remain open for business, said founder and Chief Executive Hamid Hashemi.
“To ensure an exciting future for iPic for the benefit of our guests, members, employees and other partners, we have hired top consultants and advisors to find a partner who shares our vision,” Hashemi said in a statement. “Our brand is thriving and leads the industry in popularity, but our balance sheet needs to course correct.”
The company’s stock plunged 54% to 76 cents a share. The stock has lost nearly all its value since the company held its initial public offering in February last year at $18.50 a share.
Founded in 2010, iPic carved out an early niche in the film exhibition industry with its high-end in-theater dining concept in which patrons could order food and beverages, including wine and cocktails, from their seats with the push of a button. Many iPic locations also have full-service restaurants attached. IPic acquired Gold Class Cinemas, which pioneered the idea of letting customers order food and booze from their seats when it opened its theater in Pasadena in 2009.
But the concept has since become mainstream as large exhibitors have upgraded their theaters to combat long-term declines in attendance. Rivals such as Mexican theater chain Cinepolis and Leawood, Kan.-based AMC Theatres, the world’s biggest circuit, have introduced their own luxury theaters with dine-in options. Perks such as recliner seating and alcoholic beverages have become increasingly common.
The tough competition, which often offered amenities at a lower price than iPic, proved be a major obstacle, according to court filings. An iPic adult ticket costs about $32, a high price compared to most other theaters, even in major cities such as Los Angeles.
“Even though the company’s competitors’ overall experience did not compare to that of [iPic], the availability of reclining seats used by competitors at a lower consumer price point proved to be a challenge,” said Aurora Management Partners co-founder David M. Baker, in his court declaration filed Monday.
Rising construction costs, a disappointing IPO and the cyclical nature of the box office also posed challenges, Baker wrote. The company had planned to build 20 to 25 locations.
iPic has struggled under a heavy debt load. The company, in a regulatory filing, said it owes $205 million to secured creditors under a pre-petition loan agreement, along with $13 million to $15 million to unsecured creditors, including vendors and suppliers. iPic posted a loss of $56.8 million last year. As of Dec. 31, 2018, the company had assets valued at $158.7 million and liabilities totaling $277.9 million.
Current management will remain in place during the bankruptcy process, which the company expects will take 90 to 120 days, the firm said.
The company has secured $16 million in debt financing from the Teachers’ Retirement System of Alabama and the Employees’ Retirement System of Alabama to fund its operations.
iPic has 240 full time employees and 1,770 part-time workers.