iPic Entertainment, which operates 16 luxury cinema and dining locations in nine states, filed for Chapter 11 bankruptcy on Monday in Delaware Bankruptcy Court as it pursues a financial restructuring or possible sale.
Shares in the company, which went public in 2017, tumbled nearly 60% in pre-market trading to just 68 cents, down from Friday’s closing price of $1.67.
The company said it owed roughly $205 million “in unpaid principal under the pre-petition loan agreement, plus interest and fees” as well as an additional $13 million to $15 million to vendors, suppliers and unsecured creditors.
iPic has lined up $16 million in debtor-in-possession financing to continue operations in its 16 locations, and promised to continue its 2 million-member loyalty program.
On July 1, the company failed to pay a $10 million interest payment to the Teachers’ Retirement System of Alabama, its principal debt holder, which led to the decision to restructure, according to MarketWatch. PJ Solomon has been retained to lead the bankruptcy sale process.
Founder and CEO Hamid Hashemi noted that the once innovative company has lost steam in its attempts to expand even as bigger rivals like AMC have introduced luxury elements to their own theaters.
“IPIC was the first and only company building luxury theaters just 10 years ago which led to double digit growth year over year before the industry took notice. IPIC’s business plan called for building 25 locations in 4 to 5 years,” Hashemi said in a statement. “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. Importantly, delays related to the Delray Beach location, resulted in unforeseen costs and a significant slowdown in circuit-wide development and new grand openings.
He added, “The decision to commence a chapter 11 case to pursue a comprehensive restructuring was not taken lightly but is necessary to accomplish our long-term goals and secure the Company’s future.”