Luxury theater chain iPic filed for Chapter 11 bankruptcy protection on Monday and will try to sell itself.
The company, led by Hamid Hashemi, a former executive of big-box mega theaters, said delays in development and the high cost of capital depleted iPic's resources.
Shares of the company fell nearly 50% on the news, trading around 85 cents ahead of the opening bell. At the close on Friday, shares traded at $1.67.
"Importantly, delays related to the Delray Beach [Florida] location resulted in unforeseen costs and a significant slowdown in circuit-wide development and new grand openings," Hashemi said. "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."
The company hopes to restructure its debt and strengthen its balance sheet, but will also pursue a sale.
IPic said its theaters will remain open during the transition and its employees, vendors and suppliers are still being paid. IPic has 16 locations in nine states and has plans to open locations in four additional states.
"The financial restructuring will allow the company to further improve and enhance its theaters and dining experiences, continue to provide an unparalleled guest experience that is evidenced by the over 2 million iPic Access loyalty members, and continue with its expansion plans," Hashemi said.
Last week, the company warned investors that it could file for bankruptcy after it missed a $10.1 million interest payment to the Employees Retirement System of Alabama and the Teachers Retirement System of Alabama. At the time, iPic said it had $2.2 million in cash on hand.
Same-store sales at the theater chain had been on the decline in 2018, but plummeted in the first quarter this year, falling 21.7%.
The company blamed the types of movies being released by Hollywood, noting that many of the blockbuster films were geared more toward children. It also said the January government shutdown and February's weather resulted in closures and weaker attendance.
As a luxury theater, with premium seats and in-theater food service, iPic's tickets are more than double, and sometimes triple, the national ticket average of around $9. Families are less likely to go to these types of theaters because of the high cost.