AMC Entertainment Lenders Urge It to Declare Bankruptcy

Although AMC Entertainment Holdings (NYSE: AMC) got a $100 million lifeline last week, it still needs $750 million more to make it through next year. Some of its lenders are thinking it may not be worth it.

Three of its creditors are urging the theater operator to declare bankruptcy. If it agrees to do so, they will provide AMC with $1 billion of debtor-in-possession (DIP) financing. Such an arrangement allows the lenders to jump to the front of the line of all creditors who now control the company. 

It's a dual-edged sword, since filing for bankruptcy protection is supposed to give a business relief from its lenders as it reorganizes, but in AMC's case, it may not have the financial wherewithal to continue operations. DIP financing, on the other hand, gives it the money it needs, but the lenders would call the shots, even if management remains in place.

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Source Fool.com