Cineworld Group PLC is preparing to file for bankruptcy, according to the Wall Street Journal.
The British-based firm is the second-largest cinema chain in the world, with more than 9,518 screens across over 700 sites in 10 countries.
It comes after Cineworld struggled to rebuild attendance from pandemic lows, the report added.
Cineworld has reportedly engaged lawyers from Kirkland & Ellis LLP and consultants from AlixPartners to advise on the bankruptcy process.
Cineworld is reportedly preparing to file for bankruptcy
Mike Egerton
It comes after the cinema company warned on Wednesday a lack of big-budget films was hitting admissions and would likely persist until November, potentially complicating efforts to cut debt that it warned could significantly dilute shareholder interests.
Shares in the world's second largest cinema chain slumped about 40 percent in early trading, as it faces payment obligations to former shareholders of its US division Regal and a potential multimillion-dollar fine in a dispute with Canada's Cineplex .
Cineworld's net debt jumped last year and it was hoping to bounce back in 2022 from pandemic-driven losses with film sequels such as James Cameron's "Avatar 2" and Tom Cruise's "Top Gun: Maverick", as well as some Marvel movies in the summer.
But Hollywood has released fewer films than in a typical summer, largely due to filming disruptions during the pandemic, and some genres, such as romantic comedies, are now more likely to head directly to streaming.
"Despite a gradual recovery of demand since re-opening in April 2021, recent admission levels have been below expectations," the company said, without giving details.
Cineworld's net debt stood at £7.5billion at the end of 2021 compared to revenues of £1.5billion.
In March, it said it was looking for new sources of liquidity.
The company said on Wednesday it was still in talks with parties over potential funding or a restructuring of its balance sheet, but "any deleveraging transaction will likely result in very significant dilution of existing equity interests in Cineworld".